Nomura: AI demand unexpectedly strong, memory supercycle expected to last at least until 2027

Nomura: AI demand unexpectedly strong, memory supercycle expected to last at least until 2027

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Nomura believes that, thanks to unexpectedly strong demand for DRAM from AI servers and a surge in enterprise solid-state drive (eSSD) demand, the global memory industry’s “super-cycle” will last longer than previously expected, with the current upcycle projected to continue at least until 2027.

According to news from the Trading Wind platform, in a report on the 24th, analyst CW Chung’s team at Nomura emphasized that not only is demand for high-bandwidth memory (HBM) remaining robust, but general-purpose DRAM is also showing explosive demand growth in the AI server and traditional server sectors in 2026. This has prompted customers to adopt preventive procurement strategies, driving supplier price hikes beyond Nomura’s earlier forecasts.

Given that large-scale capacity release from the supply side will not happen before 2028, Nomura predicts the memory market will remain in a supply shortage for the next few years. Nomura forecasts that the main memory manufacturers’ operating profits for the fourth quarter of 2025 will significantly exceed general market expectations. Specifically, PC and mobile DRAM prices have risen 30-40% quarter-on-quarter, while server DRAM prices have surged by 40-60%.

Benefiting from these positive factors, Nomura reiterated “Buy” ratings on Samsung Electronics and SK Hynix. Nomura raised its target price for Samsung Electronics by 6.7% to 160,000 KRW, and for SK Hynix by 4.8% to 880,000 KRW, believing the valuations of both companies remain attractive versus peers, and with significant improvement in profitability, share prices still have about 45%-50% upside potential.

AI Demand Reshapes Market Landscape

Nomura believes AI technology’s impact on the memory market far exceeds expectations. Although there are some recent market concerns over AI capital expenditure capabilities, global AI companies’ data center expansion plans have not slowed—instead, they have exceeded expectations. Besides the much-discussed strong HBM demand, the forecast for general-purpose DRAM demand in 2026 is also surprising.

This robust demand comes not only from AI servers but also from a surge in non-AI server SSD demand. Nomura points out that, due to soaring demand, memory customers have begun strategic stockpiling, granting suppliers greater pricing power. In contrast, the supply side’s response has lagged, and significant supply increases are not expected until 2028 at the earliest. This supply-demand mismatch is Nomura’s main reason for judging that the “super-cycle” will continue through 2027.

Nomura believes that the profitability of general-purpose memory chips is rapidly catching up to, or may even surpass, HBM. Although the previous market focus was mainly on HBM, Nomura estimates that the general storage businesses of Samsung Electronics and SK Hynix have already exceeded or are closing in on the profitability of their HBM divisions.

Specific data shows that DRAM prices for consumer products (PC and mobile) rose 30-40% quarter-on-quarter, while server DRAM posted growth of up to 40-60%. In NAND, while the price increase for mobile applications was more modest, enterprise SSD prices are expected to rise by 30-40% quarter-on-quarter in Q4 2025. Based on this, Nomura believes its previous forecast for a 25% quarter-on-quarter average price increase for general DRAM in Q4 2025 was too conservative.

Supply Shortage and Flexible Product Mix

On the supply side, Nomura expects shortages to persist until 2027. Although investors have been closely watching memory manufacturers’ capacity expansion, considering the timetable for building, expanding, and upgrading new plants, large-scale capacity release will take time.

Previously, memory companies primarily allocated capacity to HBM, but as general-purpose chip margins have quickly improved, Nomura expects manufacturers to be more flexible in producing general products than before. This strategy can not only maximize profits but also strengthen their bargaining power in future HBM price talks with ASIC customers. Nomura specifically mentions that Samsung Electronics is expected to focus more on general-purpose products and producing HBM4 for Nvidia, while SK Hynix and Micron will also adopt flexible product mix strategies depending on their respective strengths.

Raising Earnings Forecasts for the Two Korean Giants

Based on the above market judgments, Nomura has significantly raised its financial forecasts for Korean memory giants Samsung Electronics and SK Hynix.

  • Samsung Electronics: Nomura raised its forecast for 2025 Q4 operating profit by 22% to 21.5 trillion KRW, and lifted its 2026 estimate by 21.5% to 133.4 trillion KRW (far above Bloomberg’s consensus forecast of 93 trillion KRW). Nomura believes Samsung will benefit from a weak KRW and stronger than expected general DRAM price increases, with operating margins for general DRAM expected to far surpass HBM in Q4.
  • SK Hynix: Nomura raised its Q4 2025 operating profit forecast by 8.2% to 17.5 trillion KRW, and its 2026 operating profit forecast by 9.7% to 109 trillion KRW. Nomura expects that, starting Q4 2025, SK Hynix’s general DRAM operating margin will exceed HBM, and its overall DRAM margin will increase 6 percentage points quarter-on-quarter to 66%.

Nomura believes the current valuation multiples for Samsung and SK Hynix remain below memory industry peers, and, as both companies adopt active shareholder return policies and disciplined capital spending, they are expected to see a re-rating.

 

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The above highlights are from Trading Wind platform.

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