Shares in the memory chip sector surged on Wednesday, with leaders like XianDaoJiDian and ZhiChun Technology hitting their daily trading limits by midday, joined by a rally in names such as JiaoCheng Ultrasonic and ChangXin Technology.
Recent earnings reports from memory heavyweights including SK Hynix, Samsung Semiconductor, Kioxia, SanDisk, and Western Digital have revealed strong performance. Driven by a combination of rising shipment volumes and significant product price hikes, these companies have generally achieved high revenue growth. Demand fueled by artificial intelligence, particularly from data centers, remains robust, keeping large-capacity memory in a state of shortage.
Looking ahead to the fourth quarter, the overall memory market is expected to hold current price levels, with enterprise-grade storage likely to perform even better. SanDisk CEO David Goeckeler noted on a recent earnings call, "Over the past two to three quarters, we've spent a lot of time in deep discussions with our largest customers to secure their commitments to purchase our products. We now have a clear view of market demand for more than four years. We are very satisfied with our current market outlook."
Industry insiders added that while the consumer market struggles with high memory prices and weak sentiment, AI-driven demand, especially from data centers, remains strong. This will keep large-capacity storage in a persistent shortage, with enterprise-level storage prices expected to outperform.
Key Capital Inflows into Memory Chip Stocks
Data from East Money Choice shows that since August 1, major capital has been flowing into a number of memory chip stocks. SunYat Technology leads the pack with net capital inflows of nearly 3 billion yuan, followed by ShenNan Circuit with over 1.6 billion yuan. Other stocks attracting significant net capital, ranging from 1.4 billion to 700 million yuan, include HuaHong Grace Semiconductor, JiangBoLong, YouYan New Materials, XieChuang Data, GuoKeWei, ChangDian Technology, KeXiang Shares, ShengBang Shares, and JiangFeng Electronics.
Morgan Stanley: "Chip Inflation" Could Last for Years
The surge in artificial intelligence demand is driving up memory chip prices, sparking what analysts call "chip inflation." Morgan Stanley has issued a new warning that the rapid increase in demand for memory chips and the resulting high prices are unlikely to end soon, potentially persisting for years. Analyst Erik Woodring released a report on Tuesday on how to navigate the rising memory chip prices, drawing market attention. Woodring stated, "It is increasingly clear that companies view memory 'chip inflation' as a multi-year structural headwind. Rather than waiting for prices to cool before purchasing hardware, they are quickly prioritizing and accelerating purchases of PCs, servers, and storage arrays to lock in the best prices and reduce supply shortages—a phenomenon we call 'fear of missing out on procurement.'" He added that he believes there is further upside potential for earnings expectations at enterprise hardware companies, particularly those tied to servers and storage themes. Specifically, Woodring is bullish on HP, Pure Storage, TD Synnex, and Lenovo.
Woodring noted, "Since early 2025, hardware stocks have risen more than 100%, and in the U.S., their combined P/E ratio has reached 25 times, nearly double the previous peak. In other words, we may be closer to the end of the upcycle than the beginning, and hardware valuations are historically high." He cautioned, however, "Not all stocks are the same. Rather than chasing stocks that have already seen significant valuation increases, trade far above historical ranges, and are overly reliant on cyclical tailwinds, we prefer to maintain investment discipline. We still see opportunities to invest in quality stocks at this stage of the cycle, benefiting from more durable infrastructure spending and supported by structural valuation advantages and further margin improvement."
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