Due to persistent supply shortages, Morgan Stanley has raised its performance forecasts and target price for memory chip manufacturer Micron Technology (MU.US). The firm reaffirmed its "Overweight" rating on Micron and increased its target price from $350 to $450. Analyst Joseph Moore wrote in a report to clients, "Despite numerous changes in the DRAM sector over the past 12 months, we remain excited about the future." "With another significant round of price increases in the first quarter and indications that supply growth in 2026 will barely alleviate the severe shortages we anticipate, we expect further price hikes this year. DDR5 spot prices have risen another 30% year-to-date and are currently 130% above January contract prices (up 86% from December). This implies that even if mainstream prices double again, they would still be more than 10% below spot prices—and spot prices continue to climb." "Moreover, we are confident that mainstream prices could approach an average selling price level of over ten dollars per GB, as we observe buyers who did not lock in prices early are already paying amounts close to that level." Delving deeper, Moore believes Micron's earnings per share could reach as high as $52 in 2026, largely driven by high-bandwidth memory (HBM) and strong demand from Nvidia. "HBM is undoubtedly a key part of the story here; this market needs to remain robust to justify investors' willingness to pay higher valuations for the 'higher highs, higher lows' logic," Moore added. "However, current DDR5 price increases have already made the market more attractive. Therefore, despite ongoing concerns about Micron's position in HBM4, we do not expect any negative impact on earnings." Regarding the stock's recent decline, Moore stated it is difficult to identify what triggered the recent concerns, although he expects SK Hynix to secure the majority of orders for Nvidia's early Rubin architecture. He noted that even if Micron encounters any unexpected issues in ramping up HBM4 production, HBM3e will still hold a major market share. At an investor conference on Wednesday, Micron stated that there have been some "inaccurate reports" regarding high-bandwidth memory. The company is already in mass production of HBM4 and has begun shipping to customers. Additionally, Micron's HBM supply for the 2026 calendar year is sold out, and yields are in line with expectations.