Anand
AI Engineer, Thematic Stock & Crypto Trader, Fundamental & Technical Analysis
SK hynix's strong pricing and secured capacity could push memory stocks higher. Per Wall St Engine, its Q3 DRAM ASP rose by a high-20s percentage quarter over quarter, while long-term agreements cover more than half of its 2027-28 capacity. Those figures support the memory upcycle. x.comÂ
Memory stocks are very cheap on P/E ratios even if the rate of their earnings growth has peaked. Big earnings growth still lies ahead, and big cash flow makes big buybacks likely, supporting significant new highs after this correction. SMH is in corrective mode before moving higher toward the raised $850 target, up from $800. x.com x.com x.com x.comÂ
Semiconductors will need time to repair and build a base after the current correction stops. Price action deteriorated through June, with wide, loose moves, many gains made on gap-ups and overconfident traders, signs of an overcrowded group. New supply from the SK hynix ADR came at horrendous timing and hurt the group further. The correction is healthy for the market, and earnings from chipmakers and especially hyperscaler capex will offer clues on the group's health. x.comÂ
SK hynix's five-year agreements with 14 major customers cover more than half its 2027-28 capacity, giving its memory earnings unusually long visibility. DRAM prices rose 28% and NAND 25% in the quarter, while operating profit reached 62.8 billion against 58.5 billion expected; Q4 DRAM shipments are guided up 25% from Q3. Those commitments support the view that demand is not peaking yet. Overweight, $400 target. x.comÂ
Rising memory contract prices strengthen the case for memory stocks still far below their highs. JPMorgan forecasts Q4 DRAM prices up 13% and NAND up 18%; Micron is 28% below its 52-week high, Seagate 44%, Sandisk 47% and Western Digital 55%. x.comÂ
The semiconductor playbook that worked in 2025 and the first half of 2026 will likely fail from here. The era of bottlenecks, when five years of fundamentals were priced in within five weeks, is over, and so far a V-shaped recovery in AI and semis is not taking place. The cooling is probably healthy and calls for patient stock picking across subniches, with valuations hopefully mattering more. If the old regime returns, a more aggressive stance would fit again. x.comÂ
Semiconductors look attractive because SMH's largest volume since July is appearing as it defends last month's and last week's lows. This area is the concentrated spot for the ETF's largest institutional investment ever. x.comÂ
SK hynix's stronger pricing and contracted demand support the still-favored memory duration trade. DRAM and HBM capacity is sold out through 2029, and a supply-demand imbalance is expected through 2030. More than half of 2027-28 capacity is under long-term agreements, with agreed 2027 HBM prices significantly higher year on year. Guangfa HK expects fund flows and bearish sentiment to improve after earnings. x.comÂ
Semiconductors are set up for a violent, DRAM-style bust because demand again hinges on a few big customers and one theme, an AI training and benchmarking phase that will not last. NVIDIA is hurt badly if even one customer pulls back. Unlike Cisco's fungible parts, it funds custom TSMC lines, with $182 billion of purchase commitments exceeding its annual operating cash flow. Microsoft's receivables with NVIDIA jumped to about $12.2 billion, suggesting it pulled forward chips it is warehousing. … Show more
China's domestic market lets YMTC and CXMT threaten Micron, Samsung Electronics and SK hynix without entering US products. China receives 15-25% of smartphones and PCs and is on a path to at least 20-30% memory share over the next several years; current leaders are much too optimistic. History suggests at least a near-term semiconductor rally even if the AI trade has topped. It likely has not: agentic AI should give the trade room to run into 2027. x.com x.com x.comÂ