Micron (NASDAQ: MU) received an upgrade to Equalweight by Morgan Stanley on Monday, accompanied by a $130 price target. The upgrade signifies a shift in sentiment from the investment firm, acknowledging previous missteps in their negative stance on the semiconductor company.

Morgan Stanley admits to underestimating the fundamental and narrative implications of Micron's strength in AI specialty memory. Three key errors were identified in their analysis. Firstly, they overemphasized recent losses, expecting a more significant impact on valuation than realized. Secondly, they underestimated the significance of High Bandwidth Memory (HBM) to Micron's narrative, a critical technology for AI. Thirdly, they didn't fully grasp the importance of HBM in turning around the base business, particularly in driving near-term fundamentals.

Despite some concerns regarding current wafer commitments and the consumption of HBM relative to industry supply, Micron's position in the AI semiconductors space and its potential positive preannouncement in upcoming conferences led Morgan Stanley to upgrade the stock to Equalweight.

The reaction in the market was favorable, with Micron's stock opening the regular session at $127.30 and closing at $129.00, marking a gain of 2.96% from the prior day's regular close.