#分享美股交易赢英伟达股票 How much longer can the storage bull market run? Morgan Stanley: Supply and demand imbalance will continue for another 2-3 years, with views on Micron/SanDisk

Morgan Stanley released a storage chip report on June 3rd, with the core conclusion: The supply and demand imbalance for DRAM and NAND cannot be quickly resolved, and shortages may persist for another 2-3 years or even longer.
DRAM has become the biggest bottleneck in AI computing power development, with large-scale clients' willingness to pay remaining high. Morgan Stanley significantly raised earnings forecasts and target prices for Micron (MU) and SanDisk (SNDK)—Micron’s target price doubled from $520 to $1,050, and SanDisk’s from $1,100 to $1,750, both maintaining an overweight rating.
Let's look at the key points:
1. DRAM shortage is unsolvable, supply growth is limited
DRAM has become the main bottleneck in AI development. Shortages of clean rooms and EUV equipment restrict supply growth, and the wafer consumption intensity of HBM further squeezes traditional DRAM capacity.
Morgan Stanley expects DRAM prices to rise 40% quarter-over-quarter in May, and another 15% in August. Although below the more than 20% increase feedback from the supply chain, it is still quite strong.
Micron’s CY26/CY27 EPS forecasts are raised by 4%/48%, with CY27 EPS expected to reach $113.85. The current stock price corresponds to a P/E ratio still below 10 times.
2. NAND is also tight, SanDisk benefits from enterprise SSD demand
AI inference demand is changing the NAND market structure, with large-scale clients locking in high-performance NAND. SanDisk’s joint venture partner Kioxia only slightly adjusted its long-term bit growth expectation from 20% to 22%, with capital expenditures remaining low (about $4.7 billion annually), limiting supply increments.
Morgan Stanley raised SanDisk’s CY26/CY27 EPS forecasts by 12%/24%, with CY27 EPS expected to reach $208. The target price of $1,750 still corresponds to less than a 10x P/E ratio.
3. Long-term contracts are a “symptom” rather than the “cause”
Market attention is on multiple long-term supply agreements (LTA). Morgan Stanley believes LTA is a necessary condition for customers to ensure supply, demonstrating that large-scale clients are willing to continue expanding storage procurement over the next few years, rather than being the core driver of price increases. The real driving force remains the supply-demand imbalance.
4. Accelerated capital returns: buybacks to restart soon
Micron previously could not buy back shares due to CHIPS Act restrictions, but is expected to initiate large-scale buybacks starting FY27. Morgan Stanley’s model shows buybacks of about $50 billion in FY27-28. SanDisk’s free cash flow conversion rate has historically been higher, benefiting similarly.
5. Valuation still has room for improvement
Micron’s target price is based on a 29.5x long-term cycle EPS ($35), and SanDisk’s on a 28x cycle EPS ($62.5), both comparable to the semiconductor sector average. However, the current stock price’s P/E for CY27 EPS is still less than 10x. Morgan Stanley believes the market has not fully priced in the sustainability of profits and multiple upward revisions.
Summary: Storage chips are in a historically severe shortage cycle, with AI-driven demand structurally raising the profit center, while supply-side capacity expansion is limited, making the high prosperity duration longer than expected.
Micron and SanDisk currently have attractive valuations, and renegotiation of HBM contracts and buyback initiation in the second half of the year are expected to serve as new catalysts. Risks include demand slowdown, which could lead to high inventories and rapid price declines.
All the above content is from Morgan Stanley’s research report and does not constitute investment advice.
$MU