Samsung bemoans memory chip crunch. That’s good news for these stocks
Memory chips and storage drives are becoming a major bottleneck in the artificial intelligence buildout, driving companies’ capital expenditures higher. Chipmakers warn the supply crunch will get worse before it gets better, and Wall Street sees an opportunity. Quarterly earnings from the hyperscalers like Alphabet and Microsoft released this week showed solid cloud revenues underpinning capex that could top $1 trillion by the end of next year, and memory prices are poised to be a key driver of those costs. Samsung executive vice president of memory Jaejune Kim said Thursday that surging demand for memory is prompting pre-orders of chips that will expand the supply crunch into next year. “Our demand fulfillment rate is now at a record low,” Kim said. “Unlike previous years, customers who are concerned about supply shortages are actually bringing forward their demand for 2027 already. So currently, just based on prebooked demand alone, the supply-demand gap is looking to widen further in 2027 versus this year.” Feeling the pain of higher memory costs Tech CEOs are already feeling the sting of higher prices from chipmakers in their supply chains. “We believe memory costs will drive an increasing impact on our business,” Apple CEO Tim Cook said during his company’s earnings call on Thursday. Alphabet CEO Sundar Pichai described upstream factors facing his business as “complicated.” “Obviously, we are working through a complicated supply chain environment,” he said during earnings on Wednesday. Alphabet’s capex was $35.7 billion in the first quarter, with the “overwhelming majority of this spend in technical infrastructure to support … AI opportunities,” CFO Anat Ashkenazi said on the call. Meta Platforms is reportedly extending the shelf life of some aging servers since it can’t get new ones due to the memory chip and storage shortage. “We did not anticipate the hardware demand growth that we are seeing in the industry,” an internal company memo said, according to a Wednesday report from The Wall Street Journal . “Looking forward to 2027, the binding constraint includes critical server commodities—particularly DRAM and HDDs.” DRAM is a type of fast, short-term computer memory while hard disk drives (HDDs) are for higher-capacity, longer-term storage. A chip shortage produces an opportunity These and similar product segments are where Wall Street is seeing a play for investors. “With mega cap tech earnings coming in solid, adding more fuel to the AI theme, we believe that investors are likely to continue to chase the perceived tech winners in semis and memory,” chief investment strategist Chris Senyek with Wolfe Research wrote in a Friday note to investors. Micron Technology , SK Hynix and Samsung Electronics are some of the largest producers of DRAM as well as of NAND, another type of faster, short-term computer memory that’s a focal point in supply chains for AI infrastructure. SK Hynix and Samsung Electronics are two of the largest holdings in the iShares MSCI South Korea ETF (EWY) . The fund is up 67% in 2026. NAND-maker Sandisk sailed past earnings expectations on Thursday with a third-quarter adjusted EPS of $23.41, winning laurels from the Street. Analysts with Bernstein were blown away by “nosebleed” average selling prices (ASPs) that they said were “now locked in.” “Revenue was up 97% to $5.95bn (vs. consensus $4.72bn), driven by ASP up a whopping 140% [quarter-over-quarter] while slightly offset by high teens bit shipment decline … The EPS of $23.41 beat us, consensus and our bull case,” Mark Newman and colleagues wrote for Bernstein. Ben Reitzes with Melius Research described price “pressures from DRAM and wafer shortages” as “massive” and component prices in NAND and DRAM as a “big headwind” for downstream hardware builders. Seagate Technology and Western Digital are among the largest makers of hard disk drives. Seagate stock is up about 22% this week, up 68% over the last month, and up almost 180% over the last six months. Western Digital stock is up 43% in the past month. Analysts see capex within the memory sector itself driving further expansion as end-user demand from the hyperscalers undergirds the buildout. Memory equipment testing is a space that’s poised to gain, JPMorgan analysts said Thursday. “Memory test represents the most underappreciated near-term upside vector, with upside from capacity buildout not yet fully reflected in estimates,” Samik Chatterjee wrote for JPMorgan. “The market is significantly underestimating the memory test inflection as greenfield fab deployments (Samsung P4, SK hynix Yongin, Micron Idaho) begin deploying testers at scale.”
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