Micron Stock Is a Top Pick and Deserves a New Street-High Price Target, Says Morgan Stanley

Micron (NASDAQ:MU) shares have almost tripled on a year-to-date basis with the memory giant riding a wave of AI-driven demand for its products.

However, such is the growing need for DRAM (dynamic random-access memory), Morgan Stanley analyst Joseph Moore thinks the Street is underappreciating the story developing here.

In fact, Moore, who ranks among the top 3% of Street stock experts, has now not only made the stock a Top Pick but has also raised his price target to a Street-high of $325 (up from $220), suggesting the shares will gain 33% in the months ahead. It hardly needs adding, but Moore’s rating stays an Overweight (i.e., Buy). (To watch Moore’s track record, click here)

Interestingly, it was only a little over a month ago that Moore upgraded his rating for Micron, but since then DDR5 (the latest generation of DRAM) spot prices have tripled. Historically, such a dramatic move in DRAM pricing hasn’t been seen since the cycles of the 1990s. In terms of the “severity of shortage” – based on feedback from the analyst’s buyer contacts – it feels most similar to 2018. However, unlike 2018 when Micron entered that cycle with roughly breakeven earnings, today the company is starting from record-high earnings. “We believe that’s going to move us firmly into uncharted territory from an earnings standpoint, and we think the stock has yet to fully price in the upside that’s coming,” the 5-star analyst went on to say.

When Moore upgraded the stock, he saw earnings around $20 assuming a 10x multiple. Today’s spot vs. contract pricing gap – sometimes hundreds of percent – suggests contract prices could double in the coming quarters. Applying this to November’s $12.5 billion revenue guide, with 90% margins on the incremental revenue, points to over $10 per share in quarterly EPS potential and 70% consolidated gross margins. This “earnings power” is more than twice Street estimates for CY26 and could justify a stock price near $400, with Moore’s new bull case being $420.

Moore thinks that what is “holding investors back” here is the belief that the current pricing strength won’t last, which is typical in DRAM cycles. But today, demand growth is far outpacing supply. Feedback from semicap suppliers and Samsung/Hynix indicates DRAM capacity is expanding rapidly, with fab schedules accelerated – an unusual move so soon after a market inflection, suggesting confidence that tight conditions will persist beyond just a quarter or two.

“At a time when AI sentiment is pricing in positive moves – but still with some anxiety – we see room for further enthusiasm in the story in addition to the jump in earnings power,” Moore summed up.

26 other analysts are also MU bulls, while an additional 3 Holds can’t detract from a Strong Buy consensus rating. However, the $225.36 average target implies the stock has overshot by 8%. Given this discrepancy, it will be interesting to see whether other analysts raise their price targets or downgrade their ratings shortly. (See Micron stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.