According to ChainCatcher, analyst Jukan said in a post on the storage industry cycle that compute and storage should tighten together or loosen together, and that there is no case in which compute remains in persistent shortage while storage alone swings into oversupply.
He also said the logic behind shorting storage while going long hard disk drives does not hold. In his view, HDDs are tied to the same storage cycle, and if the current cycle turns down, hard drive makers would struggle to remain insulated on their own.
Market lacks a clear view beyond 2027
Jukan said the market does not yet have a clear judgment on the path after 2027. Historically, prices have often peaked one to two quarters before supply expansion begins, followed by shipment growth and a contraction in the profit pool.
He argued that this cycle differs from those seen in personal computers, smartphones, and general-purpose servers. The products in use are not standardized, and the triggers are different. He added that some investors still pricing storage on the old pattern of profits on the way up and losses on the way down are helping keep storage valuations low.
View on valuations and the pace of decline
Jukan said a steep collapse like those seen in earlier periods is unlikely to repeat, though a gradual pullback remains possible. Even if Samsung and SK Hynix saw profit margins cut in half from current levels, he said their price-to-earnings ratios could still stay in the teens, roughly half the valuation level of hard drive companies.
He added that when storage prices decline, other forms of demand could absorb supply at different price levels. One area he highlighted was personal AI demand driven by local AI. If storage prices pushed up by hyperscale cloud providers cannot be brought under control, he said local AI will struggle to spread.
Local open-source AI seen as a potential source of storage demand
Using the shift from mainframes to personal computers and from cloud to smartphones as reference points, Jukan said he expects the current AI cycle to move from frontier labs toward local open-source AI, with that segment taking on storage demand.
He also said storage prices will not stay elevated for more than 10 years and will eventually fall, but new consumer demand, including locally run AI driven by open source, could offer support at the bottom.