Memory Prices in 2QCY26 Face Another Epic Surge: DRAM Up 57% and NAND Up 70%

Overview

This is Bernstein's monthly 'MEMORY TRACKER,' based on the latest April contract prices from TrendForce/DRAMeXchange, indicating that traditional DRAM and NAND prices will see another significant surge in 2QCY26: DRAM contract prices rose approximately 57% month-on-month, while NAND contract prices rose 65-70% month-on-month—both exceeding previous institutional expectations. On the demand side, AI servers remain the biggest driver. PC and smartphone demand has already shown signs of overconsumption due to price transmission effects, and growth rates are expected to slow significantly starting from 3QCY26. The report maintains an 'Outperform' rating for Samsung, SK Hynix, Micron, and SanDisk, providing updated target prices.

Core views

Price Side: • DRAM: April contract prices have risen across the board, with the average ASP up 57% month-on-month compared to 1QCY26. Server DRAM rose about 48%, mobile DRAM about 80%, and PC DRAM about 40%. • NAND: Contract prices are expected to rise 65-70% month-on-month in 2QCY26, with SSD and mobile NAND seeing increases of 75-80%. NAND wafer price increases have narrowed to 22-25%. Demand Side: • Servers: Demand for AI training and inference remains extremely strong. Long-term contracts with U.S. cloud providers are nearing completion, and demand for 2027 remains significantly revised upward. • PCs: The early-year stock-up effect will weaken after 2Q26, and annual PC shipments are expected to decline by 13.5%, with price negotiations slowing down. • Smartphones: Affected by cost transmission, annual shipments are expected to drop by 16%, though demand for high-end models remains relatively stable. Supply Side: • Major manufacturers continue shifting capacity from PCs and mobile devices toward servers and eSSDs, leaving traditional DRAM and NAND wafer supplies extremely tight. • Long-term agreements (LTAs) covering more enterprise and PC OEM customers could smooth future price fluctuations. Profitability and Valuation: • Institutional models project that memory prices will remain strong through 2027, beginning to fall in the second half of 2027 and entering a normalization phase in 2028. • Profit forecasts for Samsung, SK Hynix, Micron, and SanDisk have been significantly raised, and current valuations remain below historical averages.

Analysis framework

The report uses a four-step framework: 'Spot and Contract Price Tracking → Demand Breakdown → Supply Constraints → Profit Reassessment': 1) Monthly summary of spot and contract prices published by TrendForce, calculating industry average ASP weighted by application; 2) Breaking down demand into four major segments—servers, PCs, mobile, and consumer—and assessing sustainability based on AI server shipments and end-customer inventory levels; 3) Evaluating supply bottlenecks through capacity shifts, process iterations, and LTA coverage; 4) Valuing leading companies using a 2-year forward P/B ratio or a 4-year average PE ratio, along with scenario assumptions.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply-demand framework

  The core contradiction in the memory industry lies on the supply side

  When demand suddenly surges (such as for AI servers) and capacity cannot expand in the short term, price elasticity becomes extremely high, prolonging the economic cycle.

• Valuation MethodPB valuation

  Using a 2-year forward P/B ratio for capital-intensive, cyclical semiconductor companies

  During cyclical peaks, earnings fluctuate greatly; using the net asset multiple can smooth out earnings peaks and troughs, matching the capital-intensive nature of the industry.

Asset mapping & comparison

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

• Samsung Electronics (005930.KS)

  Dual leader in DRAM and NAND, directly benefiting from ASP increases

  Strengths

  Largest production capacity, leading in HBM and advanced processes, strong ability to secure long-term contracts

  Weaknesses

  High storage proportion, large cyclical volatility

  Comparison

  Relatively cheaper valuation than SK Hynix, higher dividend yield

  Risks

  If capacity ramps up rapidly after 2027, price declines could exceed expectations

• SK Hynix (000660.KS)

  Leader in HBM and server DRAM, with the highest price elasticity

  Strengths

  First to mass-produce HBM, deepest ties with AI servers

  Weaknesses

  Valuation already partially reflects high profit expectations

  Comparison

  Higher profit elasticity than Samsung, but with a significant valuation premium

  Risks

  If HBM expansion accelerates too quickly or technological iteration slows down, ASPs could come under pressure

• Micron Technology (MU)

  Core player in North American AI server supply chain, directly benefiting from dollar-denominated pricing

  Strengths

  Leading in 1βnm technology, strong customer loyalty in data centers

  Weaknesses

  High exposure to the Chinese market, high geopolitical risk

  Comparison

  Still undervalued relative to Korean peers, aggressive share buybacks

  Risks

  If the U.S. further restricts sales to China, revenue will be hit

• SanDisk (SNDK)

  NAND leader, with high price elasticity in SSD and mobile NAND

  Strengths

  Vertically integrated with strong brand channels, leading SSD market share

  Weaknesses

  Product mix skewed toward consumer-grade, high cyclical volatility

  Comparison

  Target price significantly raised from $1,250 to $1,700, preferred choice in the short term

  Risks

  If NAND price wars resume, profits could quickly decline

• Kioxia (285A.JP)

  Major NAND wafer producer, but facing pressure from Chinese and Korean competitors

  Strengths

  Advanced technology nodes, decent cost competitiveness

  Weaknesses

  Lack of DRAM businesses like HBM for hedging, high exposure to single NAND segment

  Comparison

  Given an 'Underperform' rating, with a significant valuation discount

  Risks

  High risk from YMTC’s expansion and price wars in China

Key data

• DRAM 2QCY26 Contract Price Month-on-Month+57%Higher than original institutional expectations
• NAND 2QCY26 Contract Price Month-on-Month+65-70%SSD and mobile NAND lead the increase
• April Contract Price for 64GB DDR4 Server Module+53%The most scarce product category
• April Contract Price for Mobile LPDDR4+72%Low-capacity DRAM sees catch-up growth
• Annual PC Shipment Forecast-13.5%Revised downward after early overconsumption
• Annual Smartphone Shipment Forecast-16%Cost transmission inhibits replacement demand

Impact & implications

The report concludes that this memory supercycle is driven by AI server demand, with price increases and duration both exceeding expectations. Although long-term contracts may smooth future fluctuations, supply-demand imbalance will persist until 2027. For Samsung, SK Hynix, Micron, and SanDisk, profit elasticity will be concentrated in 2026-2027, making their valuations attractive; however, Kioxia faces pressure from competitive dynamics and Chinese manufacturer expansion, earning it an 'Underperform' rating. Investors should closely monitor the scope of long-term contracts, the pace of capacity ramp-up, and changes in end-customer inventory levels.

Risks

• If AI server construction slows down or consumer electronics remain weak, price increases could peak earlier than expected.
• If new capacity comes online in 2026-2027, the shortage situation could reverse rapidly.
• Technological breakthroughs and price wars by Chinese memory manufacturers (like YMTC) could push NAND ASPs lower in the long term.
• Geopolitical restrictions on sales to China could escalate, impacting revenue for Micron, Samsung, and SK Hynix.

What to watch

• Final confirmation of mobile DRAM contract prices at the end of May and progress of long-term contract negotiations
• Actual ASPs reported in Q2CY26 earnings versus institutional model projections
• Timeline for new capacity ramp-up and capital expenditure guidance in the second half of 2026
• Whether U.S. semiconductor policies toward China will tighten further