Investors in Micron Technology (MU) stock have laughed all the way to the bank over the past year, especially those who bought into the AI memory story early.
Putting the rally in context, Micron stock has gained almost 100% in the past month alone and over 350% over the past six months, outpacing the S&P 500‘s returns across both time frames by a massive margin, according to Seeking Alpha.
Additionally, Micron stock rallied over the past week as Nvidia’s incredible AI data center results underscored robust demand for AI GPUs and HBM memory.
Moreover, Dell raised its AI server sales forecast to $60 billion, providing another tailwind for Micron’s memory business, Reuters reported.
That said, Morgan Stanley analyst Joseph Moore believes the rally still has room to run.
The five-star analyst more than doubled his price target on Micron, raising it to $1,050 from $520 while maintaining an overweight rating on the stock, according to TheFly.
Interestingly, Micron’s run has been so momentous that the new target was effectively reached in after-hours trading on Wednesday, June 3, with the stock touching $1,054 before pulling back, Yahoo Finance reported.
Nonetheless, the broader takeaway centers around the tremendous AI-driven memory shortage that is likely to persist for years.
That’s a remarkable switch-up for Micron, which has traditionally been considered one of the more cyclical semiconductor plays.
Recent developments keep Micron’s AI story moving
- Micron is no longer just a cyclical memory player. The company set records for sales, gross margins, EPS, and free cash flows in fiscal Q2, backed by robust demand and tight supply. CEO Sanjay Mehrotra calls memory a “strategic asset” in the AI era.
- The shortage still matters. According to a Reuters report citing Morgan Stanley, memory prices have jumped sixfold over the past year, with AI infrastructure demand overwhelming supply.
- Competition is getting tougher. Samsung is already shipping samples of its latest HBM4E chips, ramping up the competitive heat on Micron.
Micron joins the trillion-dollar market cap club
Micron’s incredible rally over the past year has propelled it into one of Wall Street’s most exclusive groups.
The chipmaker surpassed a $1 trillion market valuation, joining an elite group of companies whose growth has been fueled by AI, cloud computing, and surging semiconductor demand.
- Nvidia: $5.20 trillion
- Apple: $4.56 trillion
- Alphabet: $4.31 trillion
- Microsoft: $3.17 trillion
- Amazon: $2.69 trillion
- Broadcom: $2.27 trillion
- TSMC: $2.26 trillion
- Saudi Aramco: $1.76 trillion
- Tesla: $1.59 trillion
- Meta Platforms: $1.58 trillion
- Samsung Electronics: $1.53 trillion
- Micron Technology: $1.22 trillion
- SK Hynix: $1.07 trillion
- Berkshire Hathaway: $1.03 trillion
Source: Data from CompaniesMarketCap
Morgan Stanley sees a longer Micron upcycle
Morgan Stanley argues that the current shortage is far from being a temporary AI bottleneck.
In fact, Moore views it as a structural problem, especially in the DRAM space, where supply continues to struggle to keep up with hyperscaler demand.
Essentially, there isn’t a “quick fix” to the problem, and Moore expects the tightness in supply to last for two to three years or longer.
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On that, during the Q1 earnings call, CEO Mehrotra said “aggregate industry supply will remain short of the demand for the foreseeable future,” as AI data-center buildouts strain memory supply.
That marks a landmark shift for Micron.
Historically, memory suppliers have been viewed as boom-and-bust chip stocks.
For context, before the AI boom took hold, Micron shares climbed to about $64 in May 2018, then tumbled 57% to $28 by year-end as NAND and DRAM prices softened.
In periods of rising memory prices, profits tend to rise sharply, but oversupply can quickly hamper margins and earnings.
However, Morgan Stanley feels AI is stretching this upcycle beyond the usual pattern.
The tech giant’s earnings change shows just how much the thesis has evolved.
Morgan Stanley bumped its calendar 2026 EPS estimate by 4%, but arguably the more important number is 2027, where its EPS estimate jumps by 48%.
Essentially, the bank now sees healthier pricing and better bottom-line numbers carrying well beyond the near-term.
At the same time, pricing assumptions are incredibly aggressive. The bank’s modeling of DRAM prices shows they will surge 40% in the May quarter, followed by another 15% in August, underscoring relentless demand and limited supply.
Additionally, Moore pointed to HBM contract renegotiations in late 2026, along with $50 billion in share buybacks across fiscal 2027 and 2028, as major long-term catalysts.
That said, based on Seeking Alpha data, Micron’s now trading at a nosebleed 48.54 times trailing non-GAAP earnings, sitting almost 75% above the sector median of around 28, nearly triple Micron’s five-year average of 17.38.
On a forward basis, though, the stock looks a lot less stretched at 18 times earnings.
Wall Street price targets for Micron stock
- Susquehanna analyst Mehdi Hosseini raised Micron to $1,750 from $600.
- UBS analyst Timothy Arcuri bumped Micron to $1,625 from $535, with a buy rating.
- D.A. Davidson analyst Gil Luria raised Micron to $1,500 from $1,000, with a buy rating.
- Barclays analyst Tom O’Malley raised Micron to $1,175.
- Mizuho analyst Vijay Rakesh raised Micron to $1,150.
- Raymond James analyst Melissa Fairbanks raised Micron to $1,100 from $530, with an outperform rating.
Related: Bank of America resets Nvidia stock forecast after key event
