Memory Stocks: The Case for a Second Leg Up Is Getting Stronger
Memory stocks stood out on Friday, September 4: $SanDisk Corp.(SNDK)$ surged 11.9%, while $Micron Technology(MU)$
Then came Goldman Sachs' September 7 readout from Samsung's non-deal roadshow, or NDR. Samsung put memory demand fulfillment at only around 60%, reiterated that supply conditions could be tighter in 2027 than in 2026, and said shortages could persist into 2028. That update came after Friday's rally, but it strengthens the fundamental case behind it.
The Shortage Could Last Longer Than Investors Expect
Samsung's NDR adds detail on why supply may not catch up quickly:
Supply and demand
Demand fulfillment is around 60%. The imbalance could widen in 2027, with tightness persisting into 2028, even if all announced industry capacity comes online.
Capital spending
Continue building factory shells, but install production equipment against confirmed demand, rather than ahead of it.
Long-term agreements
Agreements completed with the top five global data-center customers; another five large AI-related customers in advanced negotiations. Target coverage: 60%–70% of planned capacity. Some customers want terms beyond five years.
Shareholder returns
Reaffirmed the commitment to return 50% of cumulative 2024–2026 free cash flow, with both dividends and buybacks considered for future returns.
The demand backdrop remains supportive, too.
Institutions Have Cut Risk. Some Are Looking to Buy Again
In its September 4 report, BofA noted that some investors had reduced their exposure to memory stocks during the July–August correction, shifting to smaller overweight, neutral, or underweight positions. Nevertheless, they remained positive on the sector and were looking for the right time to re-enter. BofA concluded that many of the investors it spoke with appeared ready to rebuild their positions.
Citadel Securities' August 31 analysis adds useful context. Average one-month implied volatility across the 15 largest SOX constituents fell from 77.2% to 46% by August 28, a decline of approximately 40%. Options pricing had cooled sharply; that does not mean the stocks’ downside risk had fallen by 40%.
The Next Repricing Depends on How Long Profits Last
The stock correction has not been matched by a broad collapse in memory pricing.
BofA's September 4 report shows DDR5 spot prices continuing to rise and 1Tb NAND wafer prices recovering during the July–August stock correction. The bank also expects third-quarter DRAM average selling prices to increase more than 20% quarter over quarter.
BofA does not expect a hard landing even beyond 2026, as the AI boom should keep ASPs stable or only marginal price cut even in 2028.
If high earnings last longer, investors could become willing to pay more for each dollar of profit. That is the most compelling route to a second leg up.
The main threat remains supply overtaking demand. Investment discipline is not a promise to stop expanding: Mirae forecasts 2027 capital spending rising about 31% at Samsung and 40% at SK hynix. What matters is how quickly that investment becomes usable output relative to customer demand.
Bottom Line
Friday brought the price momentum. Samsung strengthened the case for longer-lasting profits. Potential institutional re-entry could connect the two—but the next rally still needs orders, pricing, and earnings to deliver.
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