Morgan Stanley said in its July 6 Asia-Pacific memory technology note that the storage sector is approaching peak rates of change in year-over-year pricing, inventories, and earnings revision breadth, suggesting that memory names could face near-term share price pressure. Even so, the bank argued that the AI-driven memory upcycle is far from over and still expects industry earnings to grow by 35% to 40% in 2027. It also said concerns about compute overcapacity at leading cloud providers may be overstated, with the real signal likely to come from whether hyperscalers maintain capital expenditure through the second-quarter earnings season. On positioning, Morgan Stanley prefers DRAM and traditional memory exposure while staying cautious on module makers. The bank also estimated second-quarter operating profit at about KRW 85 trillion for Samsung Electronics and KRW 65 trillion for SK Hynix, both broadly in line with market expectations.
According to Chaoxiang Research, citing a July 6 Asia-Pacific memory technology update from Morgan Stanley, the storage sector is nearing peak rates of change in year-over-year pricing, inventory trends, and earnings revision breadth. That setup suggests memory shares could face near-term pressure. Still, the bank said the AI-led memory bull cycle is not over, and it continues to forecast 35% to 40% earnings growth in 2027 for the industry.
Morgan Stanley said investor concerns over compute overcapacity at major cloud providers may be exaggerated. In its view, the more important signal will come during the second-quarter earnings season, specifically whether hyperscalers keep capital expenditure plans intact. The note also said that stock prices have not been meaningfully rerated after long-term agreement, or LTA, announcements. That hesitation appears to reflect lingering market memories from the pandemic era, when LTAs later turned into inventory burdens. As a result, investors want to see execution and shipments, not just contract headlines.
In terms of strategy, the bank recommended looking for opportunities in DRAM and traditional memory while avoiding module makers. For company-level expectations, Morgan Stanley estimated second-quarter operating profit of roughly KRW 85 trillion for Samsung Electronics and about KRW 65 trillion for SK Hynix, with both figures described as broadly in line with consensus expectations.
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