Most investors are focused on AI chips from Nvidia (NVDA), Intel (INTC), and AMD (AMD). However, Morgan Stanley believes the bigger opportunity lies in memory, which is essential for running these AI systems. Because of this, the firm has named Micron Technology (MU) and SanDisk (SNDK) as its “top picks,” giving both stocks an Overweight (Buy) rating.
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New trading tool for NVDA bearsMemory Stocks Offer Attractive Risk-Reward Scenario
While Morgan Stanley remains neutral on major chipmakers like AMD and Intel, it sees a more “attractive risk-reward” setup for memory stocks, as they are directly tied to rising AI demand.
The firm explained that AI growth is also evolving. As more “agentic AI” systems emerge — which can plan and take actions on their own — the role of CPUs becomes more important. In turn, these CPUs require large amounts of high-speed memory and enterprise SSDs to operate efficiently, creating strong and steady demand for memory products.
Tight Supply and Strong Demand Supports Pricing
At the same time, supply conditions are adding to the opportunity. Morgan Stanley expects data center memory supply to remain tight through at least 2027, which should support pricing and help companies like Micron and SanDisk maintain strong margins.
In addition, their revenue models are becoming stronger. Large tech firms are now signing long-term supply agreements, which not only provide demand visibility but also bring in meaningful upfront cash. This gives memory companies stronger balance sheets compared to past cycles.
Which Memory Chip Stock Is the Better Buy, According to Analysts?
Using TipRanks’ Stocks Comparison tool, we compared the two memory chip stocks. Between the two, MU stock offers the higher upside of 21%, with a price target of $543.20 and a Strong Buy rating. In comparison, SNDK offers a modest upside of 1.39%.
The Bottom Line
While Intel and AMD continue to compete on products and execution, memory companies are benefiting from a tighter supply environment and more stable demand. Morgan Stanley believes this makes Micron and SanDisk better positioned to capture gains from the next phase of AI growth.