Micron Stock: Entering Unprecedented Growth Territory

The semiconductor industry is witnessing one of the most dramatic memory chip price surges in decades, with Micron Technology positioned to capitalize on this extraordinary market dynamic. Morgan Stanley has designated the company as its "Top Pick" with a $325 price target, suggesting substantial upside potential from current levels.

Market conditions have triggered a tripling of DDR5 memory chip prices in just three months, a pace that eclipses even the notorious 2017-2018 shortage period. According to Morgan Stanley analyst Joseph Moore, buyers who failed to secure contracts early face premium payments of 50% or higher, with spot market premiums reaching triple-digit percentages in some cases.

Industry leader Samsung has already implemented price increases up to 60% since September, with contract customers potentially facing doubled terms in coming quarters. Moore projects mixed pricing will climb 15-20% in just the first two quarters of 2026. DRAM contract prices demonstrated the trend's strength with a 172% year-over-year increase in the third quarter of 2025, with further advances anticipated.

Artificial Intelligence Drives Unprecedented Demand

The primary catalyst behind these supply constraints emerges from artificial intelligence applications. Each NVIDIA or AMD graphics processing unit requires clusters of High Bandwidth Memory (HBM) incorporating up to 12 DRAM dies per stack. Data center demand is exploding at a rate that production cannot match, prompting even semiconductor equipment suppliers to accelerate manufacturing plans—a rare indicator of structurally tight market conditions likely to persist for years.

Should investors sell immediately? Or is it worth buying Micron?

Micron's financial performance reflects this favorable environment, with fiscal year 2025 revenue reaching a record $37.4 billion, representing 50% growth. Gross margins expanded to 41%, while the HBM segment generated $2 billion in fourth-quarter revenue alone. Annualized at $8 billion, this high-margin business now constitutes approximately 21% of total sales.

Street-High Price Target Signals Confidence

Morgan Stanley's upgraded $325 price target represents the most optimistic projection among major financial institutions, with a bull case scenario reaching $420—implying 71% upside potential. Moore emphasizes that valuation concerns are secondary to the wave of earnings revisions heading toward the stock. "With $25 earnings per share projected for 2026, we're navigating uncharted territory," the analyst noted.

Despite gaining 191% year-to-date and ranking among the S&P 500's top performers, Moore believes the rally has further room to run: "The market hasn't yet priced in the full upside potential." This optimism is widely shared, with 88% of the 38 covering banks recommending purchase. ADATA Chairman Chen Libai anticipates a substantial DRAM bull market in 2026, forecasting increasingly severe supply constraints.