The Cost of the Storage Feast: Behind Samsung's Doubled Profits, Apple and HP's "Profit Defense Battle" Has Only Just Begun

Global tech hardware giants are facing a severe "profit defense battle" as storage component prices soar, causing dramatic divergence within the industry. While storage chip manufacturers are experiencing explosive profit growth, downstream device makers in the supply chain are being forced to make tough choices between sacrificing profit margins or suppressing demand through price hikes.

According to Bloomberg, this imbalance is especially evident in the latest financial data. Samsung’s earnings report last week showed that the average price of DRAM (Dynamic Random Access Memory) jumped more than 30% quarter-on-quarter, and the price of NAND flash chips also rose about 20%. These surging prices have helped triple Samsung’s profits, and this rising trend is expected to continue throughout 2026.

This wave of price increases, driven by AI demand, has been described by tech research firm IDC as an "unprecedented storage chip shortage," labeling it a "crisis" for device manufacturers. The market’s reaction has been severe: after its worst performance since 2022, Apple’s stock fell another 4.4% at the start of 2026, making it one of the weakest stocks in the Nasdaq 100 index; HP’s share price dropped to its lowest level since November 2020.

Analysts point out that the current shortage is not a traditional cyclical fluctuation, but a strategic redistribution of global silicon wafer capacity. This means the cost pressure faced by hardware makers is unlikely to ease in the short term, and in this storage industry feast, they are forced to pay ever-increasing bills.

Pole-apart Stock Performance

Over the past year, skyrocketing storage component prices have resulted in deeply polarized performance on the US stock market. On one hand, storage stocks such as SanDisk, Micron Technology, and Western Digital have been the big winners. Entering 2026, SanDisk has led the S&P 500 Index with a gain of over 60%, with Western Digital and Micron also among the top performers.

On the other hand, hardware giants have fallen into a slump. Apple shares rose only 8.6% in 2025 and continued to decline at the start of the new year. After HP lost nearly one third of its market capitalization in 2025, its stock dropped another 6.8% at the start of 2026. Dell shares have fallen 28% since reaching an all-time high last October.

Rob Thummel, senior portfolio manager at Tortoise Capital, noted that these hardware companies are in a “difficult spot.” In an interview with Bloomberg, he stated:

As long as storage prices remain high — and given demand from AI, we expect this to continue for some time — the market may keep punishing these stocks.

Direct Erosion of Profits

For consumer hardware products, storage components are not only critical parts, but also constitute a major cost. IDC analyst Francisco Jeronimo points out that storage typically accounts for 10% to 20% of the material cost for hardware such as smartphones. As costs surge, companies’ profit forecasts are being swiftly downgraded.

HP is feeling the impact most acutely. Company executives estimated in a conference call that rising storage costs would reduce its adjusted earnings per share (EPS) for 2026 by $0.30. According to Bloomberg’s data summary, market consensus for HP’s net EPS for 2026 has been revised down by 7.1% in the past month.

Goldman Sachs analyst Katherine Murphy wrote in a client report that HP is the company most affected by PC profit margins and demand pressures within her coverage. She expects that price increases taken to offset higher costs from storage chips and other inputs will have a “substantial impact” on low-end consumer PC purchases in the second half of 2026.

Even Apple, with its strong pricing power, is not immune. Paul Meeks, head of technology research at Freedom Capital Markets, commented:

Over the next two years, the rise in storage component costs will be so significant that even companies of Apple’s scale will feel the impact.

Hedgeye Risk Management also said last week that its confidence in Apple is weakening as the storage issue worsens.

Irreversible Supply Shortage

The nature of this supply shortage has left the market especially concerned. IDC believes this is unlike previous typical “boom and bust” cycles. In a report, Francisco Jeronimo wrote:

“This time it’s different — it’s not simply a cyclical shortage driven by supply-demand mismatch, but potentially a permanent, strategic redistribution of global silicon wafer capacity.”

This structural change means price pressure will not subside quickly. Paul Meeks points out that although storage prices are cyclical, the current shortage is so severe that a reversal is not expected in the short term.

This pressure has even spread to chip manufacturers supplying semiconductors for smartphones. Due to risks brought about by rising storage prices, Mizuho Securities and Bank of America have recently downgraded Qualcomm and Arm. In this sector, Rob Thummel is optimistic only about Dell, as growth in its server business can partially offset the headwinds from storage costs.

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