BofA: Samsung’s upbeat 1Q26 results confirm the memory supercycle; still bullish on DRAM, NAND, and HBM

Overview

This is a BofA Global Memory Technology weekly note centered on Samsung’s upbeat preliminary 1Q26 results, concluding that DRAM, NAND, and HBM have entered a stronger memory supercycle. The report combines Samsung’s strong operating profit, a sharp rise in memory ASPs, low industry inventories, high fab utilization, expanding HBM demand, and rising cloud capex to form a constructive view on global memory supply-demand and earnings.

Core views

The key views are: first, Samsung’s preliminary 1Q26 operating profit of about W57tn, roughly 3x QoQ and 9x YoY, confirms the strength of DRAM and NAND price increases; second, 2Q DRAM/NAND ASPs may still rise about 30% QoQ, and even if spot prices soften in the near term, the pattern looks more like a soft landing than a hard landing; third, HBM, server DRAM, and the shift of capacity toward advanced processes keep traditional memory supply tight; fourth, SK Hynix is viewed as the top global memory pick thanks to HBM leadership, higher margins, and potential annual operating profit of W200tn+; fifth, Nanya Tech benefits from rising legacy DRAM prices, but its 2026-27E EPS revisions are relatively modest.

Analysis framework

The report uses a top-down global memory forecast, revisions to company earnings models, ASP assumption changes, industry cycle indicators, price tracking, inventory and utilization analysis, and a P/E-based target price approach. At the industry level, it focuses on DRAM/NAND sales, ASP, bit growth, HBM TAM, inventory weeks, fab utilization, and cloud capex; at the company level, it combines HBM share, legacy DRAM/NAND pricing leverage, EPS revisions, and target P/E multiples.

Methodology notes

• Industry cycleBofA Memory Indicator

  Measures the position of the memory cycle using multiple subcomponents such as prices, ASPs, billings, and exports.

  The report says this indicator reached a historical high of 143 in February 2026, above the historical peak average of 126, indicating that the memory cycle is in a strong uptrend.

• Forecast modelGlobal top-down memory forecast

  Forecasts DRAM, NAND, and HBM market size using assumptions for ASP, bit growth, and sales.

  The report raises 2026-28 DRAM/NAND sales forecasts by more than 10%/18%, mainly due to ASP assumptions that are more than 10% higher than before.

• Valuation methodsP/E target price method

  Derives company target prices using 2026-27E EPS and target P/E multiples.

  The SK Hynix target price of W1,650,000 is based on 7x 2026-27E EPS; the Samsung common share target price of W310,000 is based on 9x 2026-27E P/E; the Nanya Tech target price of NT$400 is based on 11x 2026-27E P/E.

• Supply-demand analysisCross-checking inventories, utilization rates, and capex

  Uses inventory weeks, fab utilization, capex structure, and capacity shifts to assess supply constraints.

  The report notes that DRAM and NAND inventories are only about 2-3 weeks, fabs are close to full utilization after excluding idle legacy capacity, and advanced products such as HBM4e, LPDDR5, and GDDR7 are absorbing capacity.

Asset mapping & comparison

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

• Samsung Electronics

  Core coverage company and source of the cycle confirmation signal

  Strengths

  Preliminary 1Q26 operating profit of about W57tn, with strong DRAM/NAND ASPs; target price of W310,000 for common shares and W233,000 for preferred shares.

  Weaknesses

  The report notes that after the 2Q26 upcycle, QoQ operating profit growth may be limited, and foundry losses plus large-scale capex are also pressure points.

  Comparison

  Compared with SK Hynix, Samsung is valued at 9x 2026-27E P/E; it has a broader scale and product lineup, but HBM execution risk is a bigger focus.

  Risks

  U.S. tariffs, 12/16-hi HBM execution, memory price declines, foundry losses, and aggressive capex increases.

• SK Hynix

  Top pick in global memory and Korean technology

  Strengths

  HBM share is expected to remain at 50-60% over the long term; 2026-27E operating profit could reach W200tn+, and high ROE of 50%+ plus annual FCF of W100tn+ support re-rating.

  Weaknesses

  The target P/E still uses 7x, below the 2016-25 average of 12x, indicating that valuation remains constrained by cyclical discounting.

  Comparison

  More directly benefits than Samsung from HBM leadership and higher margins; the target price implies more than 50% upside.

  Risks

  More aggressive capex by competitors, or commodity DRAM price gains falling short of expectations.

• Nanya Tech

  Beneficiary of the legacy DRAM upcycle

  Strengths

  1Q26 sales of NT$49bn, up 7x YoY, with legacy DRAM ASPs rising sharply in 1Q/2Q.

  Weaknesses

  The report only raises 2026-27E EPS by low single digits, because the model already reflects strong 1Q sales and assumes ASPs stabilize in 2H and 2027.

  Comparison

  Its 11x target P/E is higher than Korean memory peers because it is a more pure-play legacy DRAM name.

  Risks

  Weakening DDR4 demand, a faster shift to DDR5, severe price declines combined with U.S. tariffs, and increased memory capacity in China.

• DRAM/NAND industry

  The core cyclical assets in the report

  Strengths

  2026E sales are expected to grow 211% and 197% YoY, respectively, supported by low inventories, high utilization, and strong ASPs.

  Weaknesses

  Spot prices have already declined for several consecutive periods, and the 2H26 and 2027 ASP assumptions do not call for continued sharp increases.

  Comparison

  DRAM is more affected by HBM and high-end server products crowding out capacity, while NAND also benefits from price recovery but with a different capex expansion profile.

  Risks

  A larger-than-expected spot price decline, supply expansion, demand slowdown, tariffs, and geopolitical disruptions.

• HBM ecosystem

  The high-end memory increment driven by AI compute demand

  Strengths

  2026E TAM of US$81bn and 2027E TAM of US$110bn; GPU platforms such as Rubin Ultra increase HBM usage.

  Weaknesses

  Highly dependent on AI accelerator demand, customer qualification, yields, and advanced packaging capabilities.

  Comparison

  HBM has higher ASPs and margins than traditional DRAM, making it a key driver of profit expansion for leading vendors such as SK Hynix.

  Risks

  Volatility in orders from major U.S. tech companies, HBM execution issues, rising competition, and a slowdown in the AI capex cycle.

Key data

• Samsung 1Q26 preliminary operating profitabout W57tnRoughly 3x QoQ and 9x YoY, driven by strong DRAM and NAND ASPs.
• SK Hynix target priceW1,650,000Raised from W1,400,000; 2026/27E EPS revised up 20%/19%, implying more than 50% upside.
• Nanya Tech target priceNT$400Based on 11x 2026-27E P/E; 2026-27E EPS revisions are only low-single-digit.
• 2Q DRAM/NAND ASPup about 30% QoQThe report says contract price negotiations are strong even though spot prices have already been falling for several consecutive periods.
• 2026E DRAM sales growth+211% YoYPrimarily driven by 162% YoY ASP growth.
• 2026E NAND sales growth+197% YoYPrimarily driven by 146% YoY ASP growth.
• 2026-28 DRAM market sizeUS$400bn+The report views this as significantly above the sub-US$100bn levels seen during the 2018 and 2024-25 peak periods.
• 2026-28 NAND market sizeUS$240bn+Also significantly larger than historical peak periods.
• HBM TAM2026E US$81bn; 2027E US$110bn2026E grows 136% YoY, driven by 31% ASP growth and 80% bit growth.
• BofA Memory Indicator143Reached a record high in February 2026; historical peak average 126 and trough average 87.
• DRAM/NAND inventoryabout 2-3 weeksBelow the normal 1-2 month level.
• Capex of the top five U.S. tech companies2026E US$600bn; 2027E US$750bn+Up more than 60% YoY in 2026E, supporting memory demand for AI and cloud infrastructure.

Impact & implications

The investment implication is that the uptrend in memory prices and earnings can continue to support valuation re-rating for major memory makers, especially companies with HBM leadership, advanced DRAM capabilities, and high margins. A near-term decline in spot prices does not necessarily break the cycle; the key is whether contract ASPs, inventories, capacity shifts, and AI server demand continue to support earnings. For downstream AI, cloud, and GPU ecosystems, higher HBM content and rising cloud capex will continue to lift demand for high-end memory, but may also create cost pressure and supply constraints.

Risks

• If DRAM and NAND spot prices shift from a soft landing to a hard landing, the logic for ASP and earnings revisions would weaken.
• If competitors increase capex aggressively, supply tightness could ease earlier and prices could fall.
• Macro and geopolitical factors such as U.S. tariffs and Middle East tensions could trigger share price volatility or demand disruptions.
• If HBM mass production, 12/16-hi stacking, or HBM4/HBM4e execution falls short, profitability in high-end memory could be affected.
• Rising memory capacity in China or a faster substitution away from legacy DRAM could weigh on legacy DRAM names such as Nanya Tech.
• If major customers’ AI and cloud capex comes in below expectations, HBM and server DRAM demand will be affected.

What to watch

• Whether 2Q26 DRAM/NAND contract ASPs can continue to rise by about 30% QoQ.
• The memory guidance given by Samsung, SK Hynix, and Micron during the 1Q earnings season.
• Whether the decline in DRAM/NAND spot prices remains within the low-single-digit MoM range associated with a soft landing.
• The mass-production progress of HBM4, HBM4e, and 12-hi/16-hi HBM, along with orders from major U.S. tech customers.
• The mix of WFE and non-WFE spending in memory makers’ capex, and whether more aggressive capacity expansion emerges.
• Whether the BofA Memory Indicator remains elevated around 143 or starts to retreat from its historical high.
• Whether capex plans for the top five U.S. tech companies in 2026-27 stay on the path of US$600bn and US$750bn+.