Memory stocks have risen sharply, but JPMorgan remains constructive on the AI-driven memory upcycle

Overview

This is a JPMorgan pre-earnings preview on the memory market. Amid a sharp run-up in share prices and short-term volatility, the report emphasizes that investors should focus on fundamental variables: long-term supply agreements, memory content per AI server rack, CSP capex, HBM supply-demand conditions, memory makers' expansion pace, the IPO of a Chinese DRAM competitor, and shareholder return policies. The overall conclusion is positive, arguing that memory's importance as a strategic asset in the AI value chain is rising, supporting a value share and valuation center that are higher than in past cycles.

Core views

The core view is that the memory upcycle will remain "higher for longer." Although the pace of LTA announcements has been slower than expected, JPMorgan believes additional LTA disclosures in 2H26 could drive valuation re-rating. Memory content optimization and specification adjustments are mainly being driven by supply shortages rather than AI demand destruction; the share of memory value within CSP capex is rising rapidly, reflecting the increasingly critical role of memory in AI system performance. On the supply side, even if expansion accelerates, the greenfield buildout cycle and the structural limitation of HBM on bit output mean near-term bit growth remains limited.

Analysis framework

The report combines an event-forward-looking and supply-demand framework, analyzing catalysts for the CY2Q26 earnings season, LTA contracts, CSP capex, HBM/DRAM/NAND prices and capacity, historical relationships between share price and EPS revisions, and cross-validating memory makers in Korea, China, and Japan, Chinese DRAM competitors, and US hyperscalers.

Methodology notes

• Industry supply-demand analysisMemory supply-demand tightness framework

  Supply constraints and AI demand expansion jointly drive the memory upcycle

  The report uses AI infrastructure buildout, structural HBM capacity occupation, the greenfield expansion cycle, and CSP demand as the main variables for judging DRAM, NAND, and HBM supply-demand gaps.

• Event-driven analysisEarnings season catalyst tracking

  MU earnings, LTA announcements, CSP capex, and a Chinese DRAM IPO may affect short-term share prices

  The report lists Micron's June 25 earnings, pre-July LTA disclosures by Asian memory makers, CSP June-quarter guidance, and the IPO of a Chinese DRAM maker as the key near-term catalysts.

• Valuation and relative performanceShare-price performance versus EPS revision cycle comparison

  Memory stocks should ultimately revert to the EPS revision cycle, with LTA providing a trigger for valuation re-rating

  The report compares SEC and Micron's share performance around MU earnings and EPS revisions, concluding that although near-term volatility is high, the medium term is still driven by earnings upgrades and LTA support.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• KIOXIA Holdings (285A.T)

  Company discussed in the report, rated OW

  Strengths

  Benefits from NAND/SSD demand, AI infrastructure memory demand, and industry supply-demand tightness; the latest disclosed target price of ¥155,000 is above the report price of ¥92,500.

  Weaknesses

  The share price has already risen sharply and is sensitive to expectations for LTAs and price increases; J.P. Morgan discloses market-making, shareholding, and potential investment-banking relationships.

  Comparison

  Together with Samsung Electronics, it is one of the major Asian memory stocks and is maintained with a constructive view in the report.

  Risks

  NAND/SSD price volatility, insufficient validation of AI demand, downward revisions to CSP capex, intensifying competition, and valuation pullback.

• Samsung Electronics (005930.KS)

  Company discussed in the report, rated OW

  Strengths

  It has a complete DRAM, NAND, HBM, and AI memory portfolio, and may benefit from LTAs with US hyperscalers, HBM supply tightness, and CSP capex growth; the latest disclosed target price of W480,000 is above the report price of W336,750.

  Weaknesses

  The report notes that factors such as corporate governance and labor strikes may affect the pace of LTA communication; capex and capacity execution still need to be continuously validated.

  Comparison

  Compared with KIOXIA, Samsung's business is broader, covering HBM, DRAM, NAND, and system semiconductors; together with SKH and Micron, it forms the core of global high-end memory supply.

  Risks

  HBM yield and specification transitions, traditional DRAM competition, CSP order timing, governance events, and short-term share-price volatility.

• Micron (MU)

  Key catalyst company referenced in the report, covered with an OW rating by Harlan Sur

  Strengths

  Its FY3Q26 earnings and potential LTA information may become an important catalyst for Asian memory stocks; the strategic agreement with Anthropic shows long-term AI memory supply demand.

  Weaknesses

  Its share price may be affected around earnings by expectation gaps and the EPS revision cadence.

  Comparison

  It shares in the benefits of AI memory supply-demand tightness with SEC and SKH, but the report focuses on the transmission of its earnings to Asian memory stocks.

  Risks

  Guidance below expectations, no incremental information in LTA, and short-term profit taking.

• Semiconductor equipment supply chain

  Indirectly benefiting asset

  Strengths

  Memory makers may raise capex guidance for the next 12-24 months, and efforts to ease capacity bottlenecks are favorable for SPE orders.

  Weaknesses

  Greenfield expansion takes 2-2.5 years, so near-term revenue recognition may lag.

  Comparison

  Compared with memory manufacturers, the equipment chain has more capex-upgrade torque.

  Risks

  A pullback in memory prices, delayed expansion plans, and weaker-than-expected CSP demand.

Key data

• Memory stock performance over the past 1-3 months+44%-184%As of the June 23, 2026 close; SOX was about +20%-88% over the same period.
• AI memory share of CSP capexAbout 52% in 2026E, may exceed 70% next yearBelow 20% in the pre-AI era, showing a significant rise in memory's share of AI infrastructure capex.
• Memory value share relative to CSP capexRose from about 20% over the past 12 months to above 50% in 2026EThe report attributes this to stronger-than-expected MoM momentum in DRAM/NAND prices.
• SKH DRAM capacity news flowYear-end high of about 630K wfpAbove JPMorgan's estimate of 590K wfp.
• Chinese DRAM maker IPO funding targetRMB 29.5 billion, or about US$4.3bnPotential listing as early as July; the market is watching capacity, yield, and the strategic focus on HBM versus conventional DRAM.
• Estimated domestically producible DRAM capacity in ChinaAbout 300K wfp by end-2026, equal to 14% of DRAM capacityThen increasing by about 100K annually through end-2029.
• Expected fair-value ASP increase for HBM on a comparable basis25%-30%The report sees limited room for buy-side expectations of 70%-100% above that.
• HBM share of total capacityAbout 20% in 4Q25, above 30% in 2028EThis reflects the structural growth in HBM demand relative to other memory products.
• 2Q26 YTD memory market cap change+153%The table shows SOX at +52% and the AI ecosystem at +29% over the same period.

Impact & implications

From an investment perspective, the report supports continued focus on major Asian memory makers and the HBM-related supply chain, especially companies with AI memory supply capability that stand to benefit from LTA and upward revisions to CSP capex. For the equipment supply chain, higher capex guidance from memory makers over the next 12-24 months could be read positively by the market. The main constraint is that share prices have already reflected an optimistic outlook to a significant extent, and further re-rating will require LTA announcements, validation of CSP revenue/capex, and earnings upgrades.

Risks

• Memory stocks have already risen sharply over the past 1-3 months, and near-term valuation and crowded positioning may create volatility.
• The pace of LTA announcements is slower than expected; if there are not more substantive agreements in 2H26, the valuation re-rating logic may be delayed.
• The rapidly rising share of memory value in CSP capex requires AI service revenue and cloud-related AI revenue breakthroughs to prove its reasonableness.
• Changes in AI server architecture, networking technologies such as CPO scale-up, or memory specification adjustments may reduce memory demand per rack.
• If a Chinese DRAM competitor expands conventional DRAM capacity faster than expected after its IPO, competition pressure in mid- and low-end DRAM could intensify.
• If HBM prices rise too far, they could dampen investment appetite for AI servers.
• There are execution risks in memory makers' expansion, yields, HBM generation transitions, and customer qualification.

What to watch

• Micron's FY3Q26 earnings guidance, EPS revisions, and LTA data points on June 25, 2026.
• CSP capex guidance from the top three US hyperscalers during the June-quarter earnings season.
• LTA announcements or data points from Asian memory makers ahead of and around the CY2Q26 earnings season in July 2026.
• CSP comments on next-generation server architectures, memory specification adjustments, and performance trade-offs.
• Details of the Chinese DRAM maker IPO, including financing, expansion, yield, HBM3/HBM3E feasibility, and DDR5 server-grade yield.
• Memory makers' capex guidance and capacity expansion pace over the next 12-24 months.
• Updates to shareholder return policies from Asian memory makers.