Tight HBM Supply Fuels Micron’s 2026 Optimism

WORTHY NUMBERS AT A GLANCE
- Morgan Stanley elevates the target to $450 (from $350) and keeps an Overweight rating.
- Morgan Stanley projects up to $52 in earnings per share for 2026.
- Micron has sold out the entire HBM supply for the 2026 fiscal year.
- Q1 FY2026: EPS $4.78 versus $3.94 expected; +21% beat.
- Q2 outlook: $18.7 billion in revenue, 67% gross margin, and $8.42 in adjusted EPS.
- Next results release set for March 26.

KICKING UP THE TARGETS ON DRAM AND HBM SHORTAGE

Morgan Stanley raised its price target to $450 and reiterated an Overweight stance. The rationale centers on rising DRAM pricing and meaningful supply constraints in HBM. The bank’s analyst, Joseph Moore, expects that burgeoning AI infrastructure buildout will bolster HBM demand in 2026, potentially lifting per-share earnings to as much as $52.

The upbeat view isn’t unique. UBS also bumped its target to $450 (from $400). Mizuho meanwhile projected $480, and Phillip Securities initiated coverage with a $500 objective.

“GREAT MEMORY CRUNCH” AS THE CHOKEHOLD EYES INTO 2028

The bottleneck in HBM deepens. Goldman Sachs describes the period as a “great memory crunch,” with relief not anticipated before 2028. TrendForce data show AI data centers accounting for roughly 70% of global HBM production in 2026, a primary driver of tight capacity.

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

Micron’s recent disclosures show HBM momentum. In Q4 of fiscal 2025, HBM revenue neared $2 billion, which translates to an annualized run-rate around $8 billion. Moreover, the entire HBM supply for the 2026 fiscal year is already spoken for. For most HBM3e volumes in 2026, price agreements with nearly all customers have already been finalized.

Other cost pressures arise from the broader memory market. Morgan Stanley highlights a strong DDR5 market, with the DDR5 spot price running roughly 30% higher since the start of the year and about 130% above January contract prices. Lenovo likewise reported memory costs up 40% to 50% in the last quarter, with expectations they could double in the current quarter.

COMPETITION AND HBM4: A NEW ROUND OF FIGHT

Competitive dynamics are intensifying as producers scale up output. Samsung has begun delivering the newest HBM4 chips, while SK Hynix, which holds about 53% of the HBM market, is also expanding production.

Micron confirms the large-volume production of HBM4. The company has shipped samples with a bandwidth exceeding 2.8 terabits per second and pin speeds above 11 gigabits per second.

THE RESULTS SIDE OF THE STORY: SUPPORT FOR THE RUN

The headline numbers underpin the optimistic setup. In Q1 FY2026, Micron’s earnings per share reached $4.78, well ahead of the $3.94 consensus. For Q2, the company guided to revenue of $18.7 billion, a new quarterly record, with a 67% gross margin and $8.42 in adjusted EPS. The next update is scheduled for March 26, which should indicate whether current pricing and supply constraints can translate into the projected strength.