Stanphyl Capital
Managing Member & Portfolio Manager at Stanphyl Capital, Value Investor
HP Inc. should see better unit sales and margins if memory prices ease, since PC makers have been slammed by soaring memory costs. A quoted industry executive, Chen, said memory inventories are actually overflowing despite public predictions of price increases through next year, with mainland Chinese suppliers flooding the market and disrupting prices. x.comÂ
HP Inc. looks cheap with two strong 2027 catalysts: cheaper memory and AI's move to the edge on PCs. At $27.80 after earnings it trades at 8.7x the low end of 2026 earnings guidance and yields 4%, and margins should improve substantially in 2027 as memory prices fall. Analysts raised targets after the report but most remain below the share price, since the sell side is reactive, not proactive. x.com x.comÂ
Tight memory supply keeps the AI memory supplier trade in bill-of-materials names if it persists. The investor aleabitoreddit reports an SK hynix shortage outlook through 2030 and an operating-margin result near 80%. HBM allocation and average-selling-price guidance are the next tests; Korea has already priced the earnings print, so the next move depends on who locks capacity. 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
Hardware vendors like HPE, HP and Logitech are now challenged as Micron locks more DRAM volume into strategic customer agreements rather than spot, since enterprises have less reason to pull in purchases when pricing is more certain. Supply-chain complexity winners like Dell are probably less advantaged too. The shift favors semicap names like Applied Materials and ASML if growth comes from bits rather than price, earns Micron a higher multiple for trading price for duration, and aids buyers. … Show more
Micron, Samsung Electronics and SK hynix look very cheap if their long-term agreements do not impose overly conservative price ceilings. Greater clarity on those pricing terms could send memory stocks up 30% in a single day. x.comÂ
Micron and SK hynix pricing in a memory shortage past 2030 extends the memory-cycle case beyond the Street's 2028 expectation. SK hynix's record quarter adds evidence: per Wall St Engine, revenue rose 328% to $78.9B, operating profit rose 632% to $62.8B, and operating margin hit 80%. Agentic and physical AI could add demand as they roll out. x.com x.comÂ
More memory CapEx may yield proportionally fewer bits as HBM consumes more wafer capacity, supporting SK hynix and Samsung's pricing. Both reported double-digit quarterly DRAM and NAND price gains; Samsung targets 60-70% of mid- to long-term capacity under LTAs. SK hynix has the stronger execution record, but Samsung could benefit enormously from conventional memory without winning HBM4. If trends persist, normalized margins could rise, though memory remains cyclical. x.comÂ
Memory makers face an inventory overhang because upcycle shipments moved stock to module makers, distributors and customers rather than clearing it. That transfer showed up in reported earnings. Prices have plunged since the October holiday; once expectations of further increases disappear and demand sentiment softens, high-priced inventory will surface and selling will be much faster than the earlier restocking. x.com x.comÂ
Micron can't and won't make a new high. 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
