Morgan Stanley sets jaw-dropping Micron price target after event

When parallels are drawn between a company and Nvidia, investors pay attention.That’s exactly how Morgan Stanley framed Micron Technology’s (MU) latest quarter, calling it one of the biggest revenue and profit surprises in the history of the U.S. chip space, second only to Nvidia’s AI-powered surge.Micron delivered another solid double beat, extending a streak dating back to fiscal Q3 2023. Additionally, over the past six months, the stock has increased by 109% and 200% year-to-date.Following the blow-out quarterly results, the firm bumped its price target on Micron stock to $350 from $338 while reiterating an Overweight rating.It also hailed it as their top U.S. semiconductor pick, another feather in the tech giant’s cap. For perspective, with Micro stock trading near $254 (at the time of writing), pointing to nearly 38% upside from current levelsThough the headline numbers were impressive, it was Micron’s guidance that reset expectations across the memory space.Micron forecasts earnings of over $8 per share, roughly double what Mr.Market expects as AI demand continues outpacing supply, signaling a major shift in memory pricing power. Morgan Stanley lifts Micron price target to $350 after blowout earnings reset expectations across the AI-driven memory market.Photo by Bloomberg on Getty Images Where Micron fits in the AI hardware stackMicron Technology (MU) fills a critical gap in the AI ecosystem that’s often misunderstood.More Tech Stocks:Investors hope good news from Nvidia gives the rally more lifePalantir CEO Karp just settled major debateSpotify just solved a major problem for listenersAmazon lawsuit could be a warning to other employersIt specializes in the production of memory chips, which function differently from the “brains” of a computer. So, if Nvidia’s GPUs are essentially the brain doing all the thinking, Micron’s chips provide the short-term and long-term memory that enables those chips to function efficiently.AI systems are storing, moving, and recalling colossal amounts of data all the time, which is where Micron’s role becomes mission-critical.Micron manufactures two key products in DRAM and NAND. DRAM is a quick, short-term memory, which is like a work desk, and it also commands premium pricing. Related: Veteran analyst makes jaw-dropping call on Tesla stockOn the other hand, there’s long-term storage, such as a filing cabinet, which holds AI data, cloud files, and photos at scale.What sets Micron apart is its AI-specific memory. Modern AI data centers require significantly more memory per server compared to traditional systems, which must be faster, denser, and more power-efficient. For perspective, AI servers such as AWS’s P5 pack a whopping 2 TB of RAM compared to 256 GB on a common general-purpose server (nearly 8 times more memory per box).Morgan Stanley calls Micron’s quarter nearly unprecedentedMorgan Stanley’s bullish take was not on Micron beating expectations, but it was on how decisively it reset them. In his note, analyst Joseph Moore talked about how Micron’s guidance came billions of dollars above consensus.Related: Bank of America sets AI stocks to buy list for 2026At the same time, he argued that earnings power moved to levels that we've rarely seen in our memory. The scale of the upside points to something a lot more structural compared to a one-off pricing bump, which points to a tightening in supply along with robust AI-driven demand.However, Moore also sounded the alarm over margin expansion, noting that Micron’s implied EBIT margins are pushing at a pace that tech players have historically struggled to sustain. According to Seeking Alpha, Micron’s current EBIT margins on a trailing-twelve-month basis are at a lofty 26%, 323% higher than the sector median.That strength comes from a power-packed combo of water-tight DDR5 pricing, improving visibility in high-bandwidth memory, along with unusually disciplined capital spending.Perhaps just as important is that demand signals appear to be as durable as ever. Micron's Earnings snapshot (Q1 FY2026) at a glanceNon-GAAP EPS:$4.78, a $0.82 beat vs. consensus.Revenue:$13.64 billion, topping estimates by about $760 million, according to Micron.Q2 FY2026 revenue guide:$18.7 billion ± $400 million (vs. $14.23 billion consensus).Q2 gross margin guide:67% ± 1% (GAAP) / 68% ± 1% (non-GAAP).Q2 EPS guide:$8.19 ± $0.20 (GAAP) / $8.42 ± $0.20 (non-GAAP) (vs. $4.49 consensus).Wall Street maps out Micron’s long-term upsideMicron’s strong quarterly performances and even healthier outlooks effectively lit a fire under price targets, with analysts leaning harder into the “AI memory shortage” narrative.Needham:$300 (from $200), pointing to nearly 33% upside, on the back of a tightening memory market along with firmer DRAM pricing linked to AI demand. Wedbush:$300 (from $220), also pointing to 33% upside, as data-center buildouts keep the pressure up on high-end memory supply.KeyBanc:$325 (from $215), or roughly 44% upside, backing an Overweight rating on fast-growing AI-driven demand and improving cycle visibility. BofA Securities:$250 (from $180), a more cautious 11% upside, while maintaining a Neutral rating, on the back of the memory upcycle. Micron’s CEO says the memory cycle has fundamentally changedMicron CEO Sanjay Mehrotra just said that AI-driven memory crunch isn’t just a 2025–2026 blip, but a multi-year structural shortage, impeding its ability to supply its clients. In doing so, Mehrotra jacked up Micron’s high-bandwidth memory (HBM), total addressable market forecast to nearly $100 billion by 2028, a couple of years earlier than previous estimates. (up from nearly$35 billion in 2025). In other words, the HBM opportunity is now expected to blow past the entire DRAM market from a few years ago.What’s even more telling is that Micron has locked in clients for its entire 2026 HBM supply, including the next-generation HBM4. That suggests hyperscalers treat memory as more of a strategic resource than a commodity.Also, later in the Q&A, Mehrotra outlined that Micron can currently meet just 50% to two-thirds of demand from most of its marquee customers, reinforcing the strength in the company’s pricing power and tightness in AI infrastructure.Related: Facebook makes daring move to challenge Disney, Netflix