In 2026, the AI computing arms race has driven explosive demand for memory chips, sending shares of SK Hynix, Samsung, and Micron—the three industry giants—soaring, with the sector presenting a picture of booming “price and volume growth” across the board. However, an unexpected weakening in a key metric from the recent quarterly earnings of SK Hynix and Samsung Electronics is sending a warning signal to Micron investors that should not be ignored—the momentum behind memory chip price hikes may be starting to fade, and the impact of this trend could extend well beyond just one quarter.
Price Increases Miss Expectations, Signaling a Potential Turning Point
On the surface, the three giants’ results remain impressive. SK Hynix posted a roughly 30% sequential price increase for DRAM chips, while Samsung’s exceeded 40%; NAND flash prices climbed even more rapidly, with SK Hynix recording sequential growth above 50% and Samsung approaching nearly 70%. Yet Wall Street’s expectations were clearly higher.
Goldman Sachs analysts had anticipated a 39% quarterly price increase for SK Hynix’s DRAM, but the actual figure came in significantly below that. The firm has since lowered its forecast for DRAM price growth in the current quarter to 19%. Meanwhile, Morningstar analysts were also disappointed by Samsung’s performance, as its price gains similarly fell short of the consensus estimate of 48%.
Given the high degree of pricing correlation among the three major players, SK Hynix and Samsung’s “below-par” results could very well signal that Micron’s DRAM pricing in its upcoming monthly earnings report will also underperform market expectations.
Signs of Slowing AI Demand and the “Double-Edged Sword” of Long-Term Agreements
Why is the pricing momentum beginning to wane? The primary factor is a potential marginal slowdown in AI demand. SK Hynix disclosed in its earnings that shipments of its HBM4 high-bandwidth memory chips came in below expectations last quarter. Although management emphasized that production would ramp up in the second half of the year, the signal has still sparked market concerns about the pace of AI chip procurement.
A more profound structural factor lies in the industry’s broad push toward long-term agreements (LTAs). Drawing lessons from the historical pain of sharp price volatility, downstream customers are increasingly inclined to lock in supply and pricing for years ahead through LTAs, while chipmakers are equally eager to secure stable order pipelines to underpin confidence in building new capacity. However, the flip side is that LTA pricing typically sits below the peak levels seen in the spot market, which directly caps the earnings ceiling during cyclical upswings.
Micron disclosed last quarter that approximately 20% of its DRAM sales and one-third of its NAND sales had already been covered under LTAs, and that proportion is likely to continue rising. While LTAs provide downside protection for corporate earnings, they also mean that when the industry cycle peaks, the pricing flexibility reflected in financial statements will be far more muted than in previous cycles.
Valuation Logic Faces a Reshaping
The market has historically assigned low cyclical valuations to memory chip stocks based on the tried-and-true experience that “a sharp rally will inevitably be followed by a sharp crash.” Now, however, the proliferation of LTAs is reshaping the industry’s earnings profile: greater earnings stability might support a higher valuation multiple, but the earnings base to which that multiple is applied—namely, earnings per share—is likely to fall short of earlier optimistic projections. More worrying still, if LTAs merely pull future demand forward, the demand vacuum after these agreements expire could trigger a more prolonged earnings downturn than in past cycles. For Micron investors, keeping a close eye on whether price growth continues to miss expectations is far more important than focusing on headline quarterly revenue figures.
