G Sachs said in a report that it now expects the supply-demand balance for conventional DRAM, NAND and HBM in 2027 to be tighter than in 2026, with tightness likely to persist into 2028. This should help memory companies sustain relatively high profitability for at least the next few years. The broker believes the market has yet to fully appreciate the durability of this memory upcycle, as reflected by the fact that most memory stocks are still trading at mid-single-digit P/E multiples.

G Sachs highlighted several key differences between this cycle and previous ones: (1) higher demand visibility driven by a significant expansion in the server/AI mix and the development of agentic AI; (2) constrained supply growth due to slower capacity expansion and higher HBM conversion ratios; and (3) more binding long-term agreements with customers and more efficient capital expenditure planning. The broker believes these factors will support demand persistently outstripping supply, resulting in a longer upcycle than in the past. It expects DRAM, NAND and HBM to remain in undersupply even through 2028.

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The broker raised its price forecasts for DRAM, NAND and HBM to reflect its view of tightening industry supply and demand. It now expects Samsung Electronics conventional DRAM average selling price to increase 326% YoY in 2026 and 27% YoY in 2027, while NAND average selling price is forecast to rise 283% YoY and 33% YoY, respectively. It also reiterated its constructive view on the catch-up effect of HBM average selling price versus conventional DRAM, which could drive around 50% growth in 2027 and lift HBM total addressable market to USD56 billion, USD116 billion and USD168 billion in 2026, 2027 and 2028, respectively.

Primarily based on higher average selling price assumptions, G Sachs significantly raised its earnings forecasts for Samsung Electronics and SK Hynix. It now expects Samsung Electronics operating profit to reach 374 trillion won, 530 trillion won and 610 trillion won in 2026, 2027 and 2028, respectively, while SK Hynix is projected to record 271 trillion won, 401 trillion won and 454 trillion won over the same period.

Reflecting its view that earnings will remain at elevated levels, the broker changed its valuation methodology for SK Hynix to a P/E approach and raised its 12-month TP to 3.5 million won, based on 9x P/E. It also lifted Samsung Electronics 12-month TP to 480,000 won, likewise implying about 9x P/E. As these targets suggest 53% and 60% upside from the latest closing prices, the broker reiterated its Buy ratings. On its updated view of higher for longer NAND pricing, G Sachs also upgraded Kioxia (285A.JP) to Buy, with a new 12-month TP of JPY93,000, equivalent to 7.8x P/E for the fiscal year ending March 2028.

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