Goldman Sachs: It is expected that the tight storage supply will continue until 2028, raising target prices for SK Hynix and Samsung Electronics.

Goldman Sachs released a report stating that the supply and demand situation for traditional DRAM, NAND, and HBM is expected to be tighter in 2027 than in 2026, and this tight situation will continue until 2028. This is expected to help memory companies maintain high profitability for at least the next few years. The bank believes that the market has not fully understood the sustainability of this memory upturn cycle, evidenced by the fact that the P/E ratios of most memory stocks are still only in the mid-single digits. Goldman Sachs will explore the differences in this cycle compared to the past, focusing mainly on: 1) higher demand visibility, coming from significant expansion of servers/AI combinations and the development of proxy AI; 2) constrained supply growth, due to slow capacity expansion and higher HBM conversion rates; 3) more powerful long-term agreements from customers and more efficient capital expenditure planning. The bank believes that these factors will support demand continuing to outstrip supply, forming a longer upward cycle than in the past. The bank expects that even by 2028, DRAM/NAND/HBM will all be in a state of supply shortage. Goldman Sachs has changed its valuation method for SK Hynix to the P/E method, raising the 12-month target price to 3.5 million Korean won at 9 times P/E, and also raised the 12-month target price for Samsung Electronics to 480,000 Korean won, reaffirming a "buy" rating. Based on the latest view of higher and more sustainable NAND prices, the bank has raised Kioxia's rating to "buy" with a 12-month target price of 93,000 Japanese yen, equivalent to a 7.8 times P/E ratio for the year ending in March 2028.