Micron Stock Is ‘Expensive,’ Morgan Stanley Says. Why It’s Still a Buy.

Morgan Stanley upgrades Micron stock to Overweight from Equal-weight. (Courtesy Micron)

Key Points

• Micron Technology’s stock rose 138% this year and 41% in September due to increased demand for memory and storage hardware.
• Morgan Stanley upgraded Micron shares to Overweight with a price target of $220, citing strong demand and potential for double-digit price increases.
• Despite concerns about competition in high-bandwidth memory, Micron’s technology is considered robust, with strong earnings power expected into 2026.

Investors have been pouring money into semiconductor-equipment stocks over the last month amid an unexpected spike in demand for memory and storage hardware.

Micron Technology has been among the biggest winners, rising 138% this year and 41% in September alone. There’s still time to buy the stock, according to analysts at Morgan Stanley.

The firm upgraded Micron shares to Overweight from Equal-weight and boosted its price target to $220 from $160 in a research note Monday. The stock is now ”very expensive,” said Morgan Stanley’s Joseph Moore, but demand has grown too strong to ignore.

Micron stock was up 3.4% to $194.28 on Monday, putting it on pace for an all-time closing high, according to Dow Jones Market Data.

Buyers of dynamic random-access memory, or DRAM, products increasingly believe supply will remain tight for the next several quarters, Morgan Stanley said. Inventories have thinned out, too. That combination means greater pricing power for Micron and stable purchase volumes into 2026.

“We believe we are looking at multiple quarters of double-digit price increases which can lead to substantially higher earnings power,” Moore wrote.

Higher demand doesn’t come without challenges for suppliers such as Micron. Some investors, Morgan Stanley noted, have raised questions about whether speed requirements from AI chip makers like Nvidia would put Micron at a disadvantage compared to competitors.

Micron may indeed be a quarter behind competitor SK Hynix in shipments of its newest-generation high-bandwidth memory, or HBM, products, Morgan Stanley said. Still, Micron’s technology is “robust,” the firm noted, and these worries amount to more of a downside risk than a serious concern.

Dozens of firms have boosted their price targets for Micron after its fiscal fourth-quarter earnings beat, which showed the highly cyclical company still in its latest demand up-cycle. That up-cycle is likely to continue, Morgan Stanley noted, but investors shouldn’t stay on the sidelines too long.

“This call is entirely because the next 6-12 months seem so strong,” Moore wrote. “This is less a valuation call and more a call to action.”

Write to Nate Wolf at nate.wolf@barrons.com