Morgan Stanley: Memory Makers Micron and Sandisk Trump Intel (INTC) and AMD for AI Exposure

Table of Contents Morgan Stanley has elevated its price outlook for Intel this week, though the investment bank declined to issue a buy recommendation. The firm increased its target from $41 to $56, attributing the revision to strengthening server market dynamics and improved earnings projections for 2026 and 2027. Intel Corporation, INTC The analyst team headed by Joseph Moore adjusted their 2027 earnings forecast for Intel upward from $0.97 to $1.34 per share. Morgan Stanley’s current projections exceed the Street’s consensus estimates for Intel by approximately 20% across both fiscal years. The firm anticipates Intel’s data center business will expand by roughly 30% on a year-over-year basis in 2026, generating $21.8 billion in sales. However, Morgan Stanley maintained its Equal-weight classification for Intel shares. The primary concern centers on the company’s product development trajectory. According to the analysts, Intel’s CEO has publicly acknowledged performance shortcomings in the forthcoming Diamond Rapids server processor. In contrast, competitor AMD’s Venice chip was characterized as “a clear major step forward.” Morgan Stanley also assigns an Equal-weight rating to AMD, with a $255 price objective. The research team believes AMD stands to gain more substantially from server market momentum due to its competitive product advantages. However, they observed that AMD’s share price movements correlate more closely with GPU metrics than CPU developments. Morgan Stanley designated Micron and Sandisk as its top investment choices for capturing AI-related CPU demand. Both companies carry Overweight ratings. “Our favorite way to play CPU strength is through memory stocks,” the analysts wrote. They highlighted constrained data center supply dynamics projected to persist through at least 2027, alongside emerging long-term supply agreements with leading cloud service providers. The bank expressed doubts regarding Intel’s foundry operations, characterizing a favorable result there as “remote.” Coinciding with Morgan Stanley’s research release, Sandisk formally became a Nasdaq 100 constituent. Nevertheless, shares dropped 1.6% to $906.48 during premarket sessions. The decline followed a substantial 12% jump the preceding Monday when Nasdaq initially revealed the inclusion. This “buy the rumor, sell the news” dynamic frequently accompanies index membership changes. Broader market weakness contributed to the retreat. S&P 500 futures declined 0.4% after escalating U.S.-Iran tensions during the weekend sparked concerns about a potentially fragile ceasefire. Atlassian is exiting the Nasdaq 100 to accommodate Sandisk’s entry. Its shares fell 1.4% in premarket trading as passive funds adjusted their holdings. Wells Fargo analyst Aaron Rakers elevated his Sandisk price target from $675 to $975 on the same day, while preserving an Equal Weight classification. The firm boosted its 2026 earnings per share forecast and established a 2027 EPS estimate of $150. Wells Fargo admitted it had “clearly missed” Sandisk’s extraordinary rally. Shares have skyrocketed approximately 2,990% over the trailing year, propelled by explosive demand for memory solutions in data center environments. The firm observed that consensus valuation metrics hover around 6 to 7 times price-to-earnings based on peak EPS, which it views as potentially limiting additional near-term appreciation. Wells Fargo’s revised $975 target exceeds the current premarket valuation, though its Equal Weight designation indicates the firm isn’t aggressively recommending immediate purchases.