J.P. Morgan maintains a constructive view on Asian memory stocks, focusing on 2H26 LTAs and tight AI memory supply and demand

Overview

This J.P. Morgan report focuses on the global memory market ahead of the CY2Q26 earnings season, examining which fundamental signals investors should continue to track amid sharp short-term share-price gains and non-fundamental volatility. The report maintains a constructive view on major Asian memory manufacturers, emphasizing that memory demand driven by AI infrastructure buildout, LTA progress, changes in CSP capex allocation, HBM pricing, and capacity expansion are key to subsequent valuation re-rating and upward earnings-estimate revisions.

Core views

The core view is that the memory upcycle will remain “higher for longer.” Although LTA announcements have been slower than previously expected, J.P. Morgan believes this is primarily because memory manufacturers are more cautious regarding pricing, prepayments, and protection clauses, rather than because demand is weakening. Continued AI factory construction is driving demand for HBM, DRAM, SSDs, and server memory, with no signs of near-term relief in supply shortages and conditions potentially becoming tighter in 2027E. The report believes that memory’s strategic position in the AI value chain is strengthening, supporting a higher value share and valuation multiple than in historical cycles.

Analysis framework

The report evaluates the memory sector across supply-demand balance, LTA progress, CSP capex allocation, memory TAM share, share-price performance versus the EPS revision cycle, HBM economics, capacity expansion plans, and the competitive landscape for Chinese DRAM. It separates recent share-price volatility from long-term fundamentals: in the short term, it focuses on MU earnings, LTA datapoints, and CSP guidance; over the medium to long term, it focuses on the supply-demand gap, HBM capacity share, changes in AI server architecture, and memory’s value contribution to AI system performance.

Methodology notes

• industry_cycleSupply-demand balance analysis

  memory S-D imbalance

  Assesses AI infrastructure demand, the structural allocation of wafer output to HBM, DRAM/NAND price momentum, and the capacity expansion cycle to determine whether the memory shortage will persist.

• Valuation methodsValuation re-rating catalyst framework

  LTA-driven multiple re-rating

  Treats long-term supply agreements as potential medium- to long-term valuation re-rating catalysts because LTAs can improve demand visibility, price stability, and customer relationship stickiness.

• earnings_revisionEPS revision cycle tracking

  share price versus EPS revision cycle

  Compares memory-stock performance with the pace of upward market EPS revisions to determine whether share prices are lagging, moving in line with, or leading earnings revisions.

• capex_allocationCSP capex memory value-share analysis

  AI memory value share within CSP capex

  Tracks changes in AI memory TAM as a percentage of CSP capex to assess memory’s strategic weight and sustainability within AI infrastructure budgets.

Asset mapping & comparison

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

• KIOXIA Holdings (285A.T)

  Japanese NAND/memory company and one of the report’s covered stocks

  Strengths

  OW rating; benefits from AI memory demand, tight NAND/SSD supply and demand, and potential LTA-driven re-rating.

  Weaknesses

  The share price has already risen sharply, and short-term volatility could increase; the company is sensitive to the memory cycle and customer capex.

  Comparison

  Compared with traditional cycles, the report believes AI demand can support a higher memory value share; along with Samsung Electronics, it is a major Asian memory name.

  Risks

  LTA delays, NAND/DRAM price declines, CSP capex below expectations, and expansion of Chinese DRAM competition.

• Samsung Electronics (005930.KS)

  Korean integrated semiconductor and memory leader and one of the report’s covered stocks

  Strengths

  OW rating; benefits from shortages of HBM, DRAM, and server memory, as well as potential strategic cooperation with AI ecosystem partners such as Anthropic.

  Weaknesses

  Corporate governance and labor issues could distract management; HBM execution and customer qualification remain market concerns.

  Comparison

  Alongside SK hynix and Micron, it is at the core of AI memory supply; valuation re-rating depends on LTAs, HBM competitiveness, and upward EPS revisions.

  Risks

  Falling behind in HBM technology iterations, LTA terms below expectations, insufficient capex efficiency, and intensifying conventional DRAM competition.

• Micron (MU)

  US memory manufacturer whose earnings are viewed as a short-term catalyst for Asian memory stocks

  Strengths

  Its strategic agreement related to long-term AI memory supply with Anthropic could provide a reference for LTA structures.

  Weaknesses

  Near-term earnings and guidance will affect sentiment toward global memory stocks.

  Comparison

  Its FY3Q26 results and LTA datapoints are viewed by the report as important external signals for Asian memory stocks.

  Risks

  Guidance below expectations, insufficient LTA disclosure, and share-price volatility around the earnings period.

• Semiconductor production equipment supply chain

  Potential beneficiary of memory manufacturers’ capacity expansion and increased capex

  Strengths

  Memory manufacturers may raise their capex outlook for the next 12-24 months, potentially improving equipment demand.

  Weaknesses

  Greenfield expansion cycles are lengthy, and actual order releases depend on manufacturers’ expansion pace and earnings expectations.

  Comparison

  Compared with memory stocks, the equipment chain is more sensitive to changes in capex expectations.

  Risks

  Expansion delays, equipment delivery bottlenecks, and a reversal in the memory price cycle.

Key data

• Memory-stock gains over the past 1-3 months+44%-184%As of the June 23 close, the report said the SOX was approximately +20%-88% over the same period.
• JPM estimate of AI memory share of CSP capexApproximately 52% in 2026E, rising to above 70% in 2027EThe report said this ratio was below 20% in the pre-AI era.
• Change in memory value share of recent CSP capexRising from approximately 20% to above 50%Based on tracking over the past 12 months; the 2026E forecast was significantly revised upward.
• Memory bit-growth outlookBelow low-20%Although manufacturers are accelerating capacity expansion, greenfield expansion requires 2-2.5 years, while HBM structurally limits bit output.
• Estimated Chinese domestic DRAM production capacityApproximately 300K wfpm by end-2026, representing approximately 14% of DRAM capacityJPM estimates an additional approximately 100K per year through the end of 2029.
• HBM profitability premium versus DRAMApproximately 20% or more in FY26EThe report believes HBM supply-demand imbalance and higher profitability support a higher ASP.
• Expected reasonable HBM peer ASP increase25%-30%The report believes buy-side expectations for a 70%-100% increase are too high.
• HBM share of total capacityRising from approximately 20% in 4Q25 to above 30% in 2028EReflects structural HBM demand growth and manufacturers’ capacity allocation shift.
• KIOXIA Holdings rating and target priceOW, target price ¥155,000, current price ¥92,500The company disclosure page lists the 285A.T price and rating, while the price chart shows the historical target price.
• Samsung Electronics ratingOWThe company disclosure page lists 005930.KS as OW.

Impact & implications

For investment implications, the report supports continued focus on Asian memory leaders and the semiconductor equipment supply chain. If 2H26 LTA announcements, MU earnings guidance, CSP capex updates, and shareholder-return policies from Asian memory manufacturers are delivered, memory stocks could receive further valuation re-rating. For the supply chain, upward revisions to memory manufacturers’ capex outlook over the next 12-24 months could benefit semiconductor production equipment suppliers; however, excessively rapid HBM price increases could suppress AI server investment appetite, requiring a balance between profitability and customer budgets.

Risks

• Memory stocks have gained substantially over the past 1-3 months, increasing short-term valuation and sentiment volatility risk.
• LTA announcements have been slower than expected; if clear agreements remain lacking in 2H26, the valuation re-rating thesis could be delayed.
• AI memory’s share of CSP capex is rising rapidly; if AI service revenue or business-model progress is insufficient, customers could reduce or optimize memory configurations.
• Changes in networking, CPO, or server architecture could reduce memory requirements per rack, although the report currently sees limited signs of demand destruction.
• Chinese DRAM manufacturers’ IPOs and capacity expansion could intensify conventional DRAM competition, particularly in the domestic B2C and low-end HBM markets.
• Excessively rapid HBM price increases could suppress AI server investment appetite and affect long-term demand elasticity.
• If memory manufacturers expand capex beyond expectations, this could create a risk of oversupply further out.

What to watch

• MU FY3Q26 earnings, guidance, and potential LTA datapoints.
• LTA announcements between Asian memory manufacturers and US hyperscalers in 2H26.
• Capex guidance from major CSPs during the June-quarter earnings season, especially the three largest US hyperscalers.
• Updates to next-generation CSP server architectures and performance trade-offs under revised memory specifications.
• Customer selection and cost implications of 12Hi versus 16Hi solutions in HBM4E.
• Capacity expansion, yields, 1anm progress, DDR5 mass-production yields, and HBM3/HBM3E feasibility following Chinese DRAM manufacturers’ IPOs.
• Updates to Asian memory manufacturers’ capex outlook for the next 12-24 months and shareholder-return policies.