Morgan Stanley Predicts 25% Memory Price Jump, Chip Stocks Rally

Morgan Stanley Sees 25% Memory Price Jump, Sparking Chip Stock Rally

A fresh call from Morgan Stanley has injected new life into memory chip stocks. Analyst Joseph Moore told clients this week that he expects memory prices to climb at least 25 percent in the third quarter of 2026 compared with the prior quarter, arguing that the recent selloff in names like Micron Technology, Sandisk and Western Digital has been overblown.

The note triggered a sharp rally on Tuesday, with Western Digital jumping double digits in percentage terms and the other two stocks also posting strong gains. The move marked a sharp reversal from weeks of heavy selling pressure that had been driven by anxiety over soft consumer electronics demand. On Wednesday the pace of the rebound slowed: Micron shares slipped 1.17 percent to $959.48, Sandisk added 0.62 percent to $1,599.27 and Western Digital edged up 1.51 percent to $556.67.

Moore anchored his price forecast in conversations with purchasing managers at large data-center operators. He said he sees no sign that the scarcity of memory chips for data centers is easing, and in fact the shortage could worsen through 2027 and 2028. The current price cycle, he argued, is almost entirely driven by data-center demand, while weakness in PCs, smartphones and consumer electronics unsettled many investors and triggered the selloff.

The bullish argument gained additional weight from a separate call by analyst Vivek Arya, who pointed out that cheaper, open AI models could actually boost memory demand. His reasoning: every user who downloads an open model needs extra memory to run it on their own hardware, broadening the demand base beyond the hyperscale cloud providers.

Inside the Bull Case: Datacenter Demand vs. Consumer Weakness

Datacenter Demand Remains the Engine

The core of Morgan Stanley’s thesis is straightforward: the artificial-intelligence infrastructure buildout is still in its early innings and there is simply not enough memory to go around. Procurement managers at the hyperscale cloud companies, Moore found, are not seeing any loosening of supply. If anything, the combination of larger and more powerful AI models with a shortage of high-bandwidth memory and enterprise SSDs points to persistent tightness. That view stands in contrast to the market’s recent focus on sluggish consumer electronics, which had led some to believe the whole memory sector was headed for a downturn. Moore explicitly labels that selloff as a buying opportunity, betting that data-center spending will more than offset the consumer drag.

The Open-Model AI Wildcard

Vivek Arya’s take adds a fresh layer to the bull case. Much of the debate around AI has centred on whether proprietary models or open-source alternatives will win. Arya, however, argues that the rise of open models is actually a positive for memory demand. Because open models can be downloaded and run locally, each new user adds incremental memory needs — whether in a personal workstation, a small business server or a research cluster. This could widen the customer base for memory chips well beyond the handful of cloud giants that dominate current demand. It is a contrarian twist: the very trend that some investors fear as a threat to established AI players could end up strengthening the memory market.

What the Forecast Means for Micron, Sandisk and Western Digital

For investors watching the memory space, the diverging dynamics between data-center strength and consumer weakness create a more nuanced picture than the headline number suggests. Concrete signposts to watch include:

• Micron’s fiscal fourth-quarter report (expected in late September) will provide the first hard evidence of whether the 25 percent price jump is materialising. Focus on data-center SSD and HBM revenue and the gross-margin guidance.
• Sandisk and Western Digital are more exposed to the NAND flash market, where the supply glut in consumer segments has been most visible. Their upcoming quarterly updates will clarify to what extent data-center demand is stemming the consumer weakness.
• Data-center capex announcements from Microsoft, Amazon and Google in the coming weeks will be a direct leading indicator: sustained or rising spending reinforces Moore’s tight-supply narrative.
• The open-model trend goes beyond the stock market. Any surge in downloads of open-source LLMs — and the associated local hardware requirements — could show up in workstation and enterprise memory sales as early as the start of 2027.