Bernstein believes that tight supply and demand for conventional DRAM and NAND will support the memory cycle remaining at a high level through 2027, with “normalization” beginning only in 2028, and the adjustment is expected to be relatively mild, while industry profitability will remain above historical peaks. In terms of HBM, the pace of HBM4 mass production has become a key variable, Samsung is expected to gain more market share, while SK Hynix faces more conservative pricing assumptions. As the room for earnings upgrades narrows, long-term supply agreements and shareholder returns will gradually become the core factors driving memory stock performance.
Bernstein pointed out in its latest global memory industry report that the current memory chip cycle remains in a high-prosperity phase, and tight supply and demand for DRAM and NAND are expected to persist through 2027. The bank expects that in the third quarter of 2026, average selling prices for conventional DRAM and NAND will both rise by about 15% to 20% quarter over quarter, with DRAM price increases higher than the previously expected 12%. Prices are still expected to continue rising in the fourth quarter, but the quarter-over-quarter increase will narrow to the mid-to-high single digits. The report believes that as price caps in long-term supply agreements gradually limit further room for price increases, and as new capacity is gradually released, the current super boom cycle is expected to begin “normalizing” in 2028.
Bernstein further pointed out that the room for memory chips to continue rising sharply in price is narrowing. On the one hand, more and more long-term supply agreements include price caps; on the other hand, PC and smartphone customers have begun reducing finished-device shipments, thereby lowering memory procurement demand. After entering 2027, under the constraints of price caps in long-term supply agreements, prices are expected to rise only modestly.
Compared with conventional DRAM and NAND, Bernstein has become more cautious about HBM price trends and has lowered its forecast for HBM price increases in 2027. The bank believes that some manufacturers face difficulties in supplying HBM4, and the transition from HBM3E to HBM4 may be slower than previously expected.
As the current memory cycle has lasted for about a year, Bernstein believes that market earnings expectations have basically caught up with industry fundamentals, and the room for large earnings upgrades in the future is diminishing. Therefore, the key factors driving the next phase of memory stock performance may gradually shift from simply “price increases and earnings upgrades” to long-term supply agreements and shareholder returns. The report shows that many memory manufacturers expect that ultimately 50% or even more of their revenue or capacity will be covered by long-term supply agreements, and many agreements already include price commitments. Taking Micron as an example, as of June this year, it had signed 16 long-term agreements, of which 14 agreements had a total contract value of $100 billion based on minimum prices; SanDisk had signed 8 agreements as of early August with a minimum contract value of $93.9 billion. Bernstein particularly emphasized that the next thing to watch is the financial guarantees behind these agreements, because the level of guarantees will directly affect the actual binding force of the contracts. At the same time, strong free cash flow is creating conditions for memory giants to expand shareholder returns.
After the latest forecast adjustments, Bernstein continues to give Samsung (SSNLF), SK Hynix (SKHY), Micron (MU), and SanDisk (SNDK) “Outperform” ratings.
