AMD or Micron: Morgan Stanley Selects the Top AI Chip Stock to Buy

Since the introduction of ChatGPT a little under three years ago, AI has permeated the conversation like no other trend. The game-changing technology is already shaping our lives by changing how we work, learn, and make decisions, much like the internet did a generation ago.

Naturally, this rapid evolution has placed chipmakers at the center of the AI revolution. These companies provide the high-performance processors that make it all possible, powering machine learning models and data-heavy applications. According to Allied Market Research, the AI chip market was worth $44.9 billion in 2024 and is projected to soar to $460.9 billion by 2034, representing a compound annual growth rate (CAGR) of 27.6% between 2025 and 2034.

Against this backdrop, Morgan Stanley’s Joseph Moore, an analyst who ranks among the top 3% of Street stock pros, has been assessing two of the industry’s big players, Advanced Micro Devices (NASDAQ:AMD) and Micron (NASDAQ:MU). In his view, one stands out as better positioned to capitalize on the AI boom.

So, we decided to give the pair a closer look. And with some assistance from the TipRanks database, we can also find out if the general Street view aligns with the banking giant’s take. Let’s dive in.

AMD

First up is AMD, a major semiconductor player that’s had an interesting path in the AI race. Investors initially placed high expectations on the company as the AI boom gained momentum, viewing it as a potential challenger to Nvidia. And it wasn’t an unreasonable bet. AMD has a proven history of closing the gap with larger competitors, having capitalized on Intel’s missteps in the CPU market and leveraged its own strong product portfolio to become a formidable presence in the industry.

But unlike Intel, Nvidia is not a company in turmoil, and it has its own ecosystem of chips, software, and developer tools that is hard to match. It soon became evident to investors that AMD has plenty of catching up to do if it wants to be an AI contender. However, AMD has a formidable CEO in Lisa Su, and while it took some time for the market to come around to the investment case here, that gradually happened, boosted by a couple of important developments.

First, AMD’s new AI products appear much more competitive, with the Instinct MI450 GPU set to launch in the second half of next year and give Nvidia a stronger challenge in the high-end accelerator market. Additionally, the company recently nabbed a blockbuster deal with ChatGPT maker OpenAI. The pair announced a 6GW agreement worth more than $100 billion to equip OpenAI’s next-generation AI infrastructure with several generations of AMD Instinct GPUs.

While Morgan Stanley’s Moore hails the importance of this deal, the analyst thinks the path for AMD to become an AI heavyweight hasn’t cleared yet.

“We have been excited to see what AMD can deliver with its rack scale products, starting with MI450 2h26. Customers have been similarly interested, but it has been our sense that there is still a bit of a ‘show me’ attitude towards AMD,” the 5-star analyst said. “This Open AI relationship is something different, as Open AI clearly seems invested in AMD’s success. This matters, as the challenges around the AMD ecosystem are likely to come from software and ecosystem support, not semis. Having the largest customer in the world committed to AMD’s success can really matter in terms of turning this into a commercial success… Longer term, the best ROI still wins, and AMD still needs to prove that they can deliver that vs. NVIDIA who remains the incumbent everywhere.”

Accordingly, Moore rates AMD shares as Equal-weight (i.e., Neutral), and his $246 price target points toward one-year gains of ~13%. (To watch Moore’s track record, click here)

9 other analysts join Moore on the sidelines, although with an additional 28 Buys, the stock claims a Moderate Buy consensus rating. The forecast calls for 12-month returns of 12%, considering the average target stands at $244.66. (See AMD stock forecast)

Micron

Next up is Micron, a $210-billion chipmaker specializing in the computer memory market. The company produces two primary types of memory chips: DRAM (dynamic random-access memory) and NAND. DRAM serves as the main memory in PCs, servers, and other devices, enabling fast access to data in use, while NAND flash offers long-term storage, retaining information even when power is off.

The company’s big AI product is HBM (high-bandwidth memory), which builds on DRAM by stacking multiple memory chips vertically and connecting them with high-speed links. This design delivers much faster data transfer and lower power use, making it ideal for handling the massive data volumes AI models require for training and inference.

And the company’s products have been gaining some serious traction, as has been evident in very strong earnings displays. The memory market is considered highly cyclical and prone to boom-and-bust periods, but boosted by the insatiable needs of AI, Micron appears to be in the midst of an elongated cycle.

The company’s August quarter (FQ4) results showed that momentum is in no way slowing down. Revenue rose by 46.1% vs. the year-ago period, climbing to $11.32 billion and beating the consensus estimate by $160 million. At the other end of the spectrum, adj. EPS of $3.03 outpaced Street expectations by $0.17.

For the November quarter (FQ1), revenue is expected to hit the range between $12.2 billion and $12.8 billion, exceeding the $11.91 billion forecast, while the company sees adj. EPS coming in between $3.60 and $3.90, comfortably above the $3.10 the analysts had in mind.

All that has helped Micron shares generate some big returns in 2025 – the stock is up by 122% year-to-date. However, Morgan Stanley’s Moore thinks there’s more fuel in the tank here.

“While MU has outperformed, we see more room to run as upward revisions continue (DDR5 spot pricing already up 15% since MU guided) and sentiment (primarily due to HBM concerns) is not yet universally positive,” the analyst explained. “With anecdotes about DDR5 server pricing up double digits in Q4 and at least that much in Q1 we think our current estimates are likely to prove even more conservative than we thought… We believe we are looking at multiple quarters of double digit price increases which can lead to substantially higher earnings power – and resolve any lingering questions on specialty high bandwidth memory for AI.”

To this end, Moore puts an Overweight (i.e., Buy) rating on MU shares, backed by a $220 price target. Should the figure be met, a year from now, the stock will be changing hands for an 18% premium.

Most on the Street are on the same page as Moore. The stock claims a Strong Buy consensus rating, based on a mix of 26 Buys and 3 Holds. At $207.96, the average target factors in a one-year gain of 11%. (See Micron stock forecast)

All things considered, while AMD and Micron offer a similar upside on paper, Morgan Stanley – and Wall Street more broadly – sees Micron stock as the stronger bet in the AI chip race right now.

To find good ideas for AI stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.