Investing.com -- Micron Technology could be entering “uncharted territory” as the memory chip market faces a 2018-style supply shortage, Morgan Stanley said, naming the stock its top pick and lifting its price target to a Street-high $325.

In a new note, analyst Joseph Moore said the bank expects “serial upwards revisions to continue, as soon as next week,” as the dynamics in the DRAM market strengthen.

“We are entering uncharted territory, as we have a 2018-style shortage forming but from a much higher EPS starting point,” Moore wrote.

The firm now forecasts $25 in calendar 2026 earnings for Micron, suggesting “conditions in DRAM will lead to new highs in earnings power.”

Since the firm upgraded Micron to Overweight just over a month ago, DDR5 spot pricing has tripled, Morgan Stanley said.

Buyer feedback is said to indicate the market “feels most reminiscent of 2018,” though this time “earnings are already at record levels,” the analyst noted.

Morgan Stanley added that “double-digit price increases” for DRAM are likely understated, with transactions “well above that level.”

The bank sees higher DDR5 margins mitigating any potential risk from HBM4 development, saying, “it doesn’t really matter” given the strength of current pricing trends.

While the firm acknowledged valuations are elevated across the sector, it believes Micron still has room to run.

“We think the stock has yet to fully price in the upside that’s coming,” Morgan Stanley said. With AI demand fueling optimism but “still with some anxiety,” the bank expects both sentiment and earnings momentum to improve further into 2026.