Morgan Stanley believes the recent selloff in US memory stocks has created an attractive buying opportunity. The bank argues that memory shortages linked to data centers are still becoming more severe, despite mixed signals across other parts of the semiconductor market.
Data Center Demand Continues to Support Memory Stocks
Morgan Stanley analyst Joseph Moore described the current memory cycle as unusual. In his view, strong data center demand remains the main force driving the market.
As a result, weaker signals from other areas may not accurately reflect the broader outlook for memory companies.
Moore said memory stocks do not yet offer the strongest risk-to-reward opportunity within Morgan Stanley’s coverage. The firm still prefers Nvidia and Broadcom. However, he added that memory stocks are quickly becoming more attractive.
AI Infrastructure Is Increasing Memory Demand
Investors have recently raised concerns about slowing growth, higher capital expenditure and companies reducing hardware specifications.
However, Morgan Stanley said these risks were already predictable. The firm also stressed that the current market does not resemble a typical memory cycle.
Memory has become an increasingly important bottleneck for artificial intelligence infrastructure. It is also playing a critical role in data center construction and agentic AI computing systems.
Therefore, sustained AI investment could continue to support demand for memory products.
Memory Prices Rise More Than 25%
Morgan Stanley said data center memory prices have increased by more than 25% during the third quarter.
Although this marks a slowdown from the price increases recorded in the second quarter, the bank said some moderation was widely expected.
Long-term supply agreements and lower hardware specifications could limit the size of price increases. However, they may also extend the duration of the current memory cycle.
According to Morgan Stanley, a longer and more stable cycle could ultimately be more supportive for memory stocks.
Supply Shortages Show No Sign of Easing
Recent discussions with data center purchasing contacts suggest that memory shortages remain severe.
Morgan Stanley said prices have risen by at least 25% quarter over quarter. That increase is higher than both the bank’s own forecasts and several third-party estimates.
The firm also said concerns about tighter memory supplies in 2027 and 2028 remain unchanged.
Memory Stocks Rally After Recent Selloff
Several major memory and storage stocks moved higher following the analyst commentary.
SanDisk gained around 5.9%, while Micron Technology rose approximately 5.2%. Seagate Technology also advanced by more than 3%.
The gains suggest that investors may be reassessing the outlook for memory stocks as AI-driven demand continues to pressure global supply.
