Goldman Sachs: Storage supply shortage expected to continue until 2028, raises target prices for SK Hynix and Samsung Electronics

On June 1, Goldman Sachs released a report stating that it expects the supply-demand situation for traditional DRAM, NAND, and HBM to be even tighter in 2027 than in 2026, with this tension persisting through 2028. This should help memory companies maintain higher profitability for at least several years into the future. The firm believes that the market has yet to fully grasp the sustainability of this memory upcycle, as evidenced by the fact that the P/E ratios for most memory stocks remain only in the mid-single digits.

Goldman Sachs will examine the differences in this cycle compared to previous ones, with key points including: 1) Higher demand visibility driven by significant expansion of server/AI combinations and the development of proxy AI; 2) Restricted supply growth due to slower capacity expansion and a higher conversion ratio for HBM; 3) Stricter long-term agreements from customers and more efficient capital expenditure planning. The firm believes these factors will support demand consistently outpacing supply, prompting a longer upcycle than before, and it expects that even by 2028, DRAM/NAND/HBM will all remain in a supply shortfall.

The firm is changing its valuation method for SK Hynix to the price-to-earnings (P/E) ratio, raising the 12-month target price to 3.5 million KRW based on a 9x P/E. It is also raising Samsung Electronics' 12-month target price to 480,000 KRW, reiterating a “Buy” rating; based on its latest view on higher and more sustained NAND prices, the firm upgrades Kioxia to “Buy” with a 12-month target price of 93,000 JPY, corresponding to a 7.8x P/E for the fiscal year ending March 2028.