Morgan Stanley has maintained its overweight ratings on SK Hynix and Samsung Electronics, a decision tied to expectations that AI-driven cloud capital expenditure will keep climbing. The bank's 2027 forecast for cloud capex was raised to 29%, which it says should extend the memory earnings cycle beyond current expectations. While DRAM and NAND price increases have clearly narrowed, the bank projects the industry will only reach the late-cycle stage in the fourth quarter of 2026. Long-term supply agreements (LTAs) enhance order visibility for the chipmakers, but Morgan Stanley cautions that they cannot fully eliminate cyclical swings. The firm's high target prices are built on the assumption that AI demand will remain persistent and that LTAs will provide a buffer against market volatility. In short, it is leaning on structural tailwinds even as spot prices show signs of cooling. The ratings highlight confidence in the sector's biggest names despite a maturing upcycle.
Morgan Stanley has reaffirmed its overweight ratings on SK Hynix and Samsung Electronics. The bank argues that sharply raised AI-driven cloud capital expenditure forecasts—with the 2027 projection upgraded to 29%—will prolong the memory earnings cycle. DRAM and NAND price gains have clearly narrowed, but the bank still expects the industry to enter the late-cycle phase in the fourth quarter of 2026.
Long-term supply agreements (LTAs) give chipmakers better order visibility, yet they do not remove cyclical swings. High target prices reflect the bank's bet on sustained AI demand and on LTA protection against volatility. In other words, Morgan Stanley is betting that memory pricing can hold up even as momentum fades.
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