Supply shortages are feared to persist through 2026, as the logic of storage chip "price-volume rising" is strengthened. Morgan Stanley reaffirms its "overweight" rating on Micron Technology (MU.US).

Due to sustained supply shortages, Morgan Stanley has raised its performance expectations and target price for storage chip manufacturer Micron Technology Inc. (MU.US), reiterating its "hold" rating on the company and raising its target price from $350 to $450. Analyst Joseph Moore wrote in a report to clients, "Despite many changes in the DRAM sector over the past 12 months, we remain excited about the future," "With another significant round of price increases coming in the first quarter and indications that supply growth in 2026 is unlikely to alleviate the severe shortages we expect, we anticipate further price increases this year. Spot prices for DDR5 have risen 30% since the beginning of the year and are currently 130% higher than contract prices in January (up 86% from December). This means that even if mainstream prices double again, they will still be more than 10% below spot prices - and spot prices are still rising. In addition, we believe mainstream prices may approach an average selling price level of over ten dollars per GB, as we see buyers who did not lock in prices early paying close to that amount." Looking more deeply, Moore believes that Micron's earnings per share in 2026 could reach $52, largely due to strong demand for high-bandwidth memory and from NVIDIA Corporation. "HBM is undoubtedly a key part of this story, this market needs to remain healthy to prove that investors are willing to pay a higher valuation for the logic of 'higher highs and higher lows'," Moore added. "However, DDR5 prices have risen to a level that makes the market more attractive, so while there is still ongoing concern about Micron's position in HBM4, we do not expect any negative impact on profits." Regarding the recent decline in the stock, Moore said it was difficult to pinpoint what caused the recent concerns, although he expects SK Hynix to receive most of NVIDIA Corporation's early orders for the Rubin architecture; and if Micron encounters any unexpected issues in increasing HBM4 production, HBM3e will still dominate the market share. Micron stated at an investor conference on Wednesday that there were some "inaccurate reports" regarding high-bandwidth memory, and the company has begun large-scale production of HBM4 and has started shipping to customers. In addition, Micron's HBM supply for the 2026 calendar year has been sold out, and yields meet expectations.