According to a research report from Gf Securities, AI memory is becoming the foundational capability supporting contextual continuity, personalization, and the reuse of historical information. It continues to expand the boundaries of model capabilities and is expected to accelerate the implementation of applications such as AI Agents. The value of AI memory is shifting from a "cost item" to an "asset item," with the value and importance of related upstream infrastructure set to continuously increase. The report recommends focusing on core beneficiaries within the industrial chain.

The main points from Gf Securities are as follows:

Overseas storage original equipment manufacturers (OEMs) reported sequential growth in revenue and profit for CY26Q1. (1) Micron: Achieved revenue of $23.9 billion in 26Q1, up 196% year-on-year and 75% quarter-on-quarter. Gross margin was 74.9%, increasing by 37 percentage points year-on-year and 18 percentage points quarter-on-quarter. (2) Samsung Electronics: Achieved revenue of $91.4 billion in 26Q1, up 68% year-on-year and 41% quarter-on-quarter. Gross margin was 61.2%, increasing by 26 percentage points year-on-year and 14 percentage points quarter-on-quarter. (3) SK Hynix: Achieved revenue of $35.9 billion in 26Q1, up 196% year-on-year and 58% quarter-on-quarter. Gross margin was 79.3%, increasing by 22 percentage points year-on-year and 11 percentage points quarter-on-quarter. (4) SanDisk: Achieved revenue of $6.0 billion in 26Q1 (corresponding to FY2026Q3), up 251% year-on-year and 97% quarter-on-quarter. Gross margin was 78.4%, increasing by 56 percentage points year-on-year and 27 percentage points quarter-on-quarter. (5) Kioxia: Achieved revenue of $6.4 billion in 26Q1, up 181% year-on-year and 81% quarter-on-quarter. Gross margin was 64.1%, increasing by 45.7 percentage points year-on-year and 31.6 percentage points quarter-on-quarter. (6) Western Digital: Achieved revenue of $3.3 billion in 26Q1, up 45% year-on-year and 11% quarter-on-quarter. Gross margin was 50.5%, increasing by 10 percentage points year-on-year and 4 percentage points quarter-on-quarter. (7) Seagate: Achieved revenue of $3.1 billion in 26Q1, up 44% year-on-year and 10% quarter-on-quarter. Gross margin was 47.0%, increasing by 11 percentage points year-on-year and 5 percentage points quarter-on-quarter.

AI storage demand continues to surge, and the execution of long-term agreements enhances growth certainty. Regarding DRAM, Micron indicated that the proportion of data center DRAM and NAND bit demand is expected to exceed 50% for the first time in CY26. Currently, some customers can only meet 50%-66% of the demand. The company has signed its first 5-year Supply Chain Agreement (SCA). Regarding NAND, SanDisk's NBM model has become clearer, with five multi-year agreements signed, the longest extending up to 5 years. These cover over one-third of the bit volume for FY27 and introduce fixed/floating pricing, prepayments, financial guarantees, and RPO mechanisms. Three contracts correspond to approximately $42 billion in Recognized Purchase Obligations (RPO), and the five agreements collectively include over $11 billion in financial guarantees. Regarding HDD, Western Digital stated that agreement durations have been extended to CY29, while Seagate's nearline capacity is almost sold out until CY27. Seagate is also advancing customized contracts with cloud and hyperscale customers through the end of FY27, specifying configurations and pricing. Overall, AI demand is strengthening customers' need for long-term supply security. The supply models of storage OEMs are evolving from traditional quarterly and annual negotiations towards medium-to-long-term demand commitments. This shift is expected to enhance the predictability of industry revenue, profitability, and returns on capital expenditure.

CY26Q2 revenue and profit guidance indicates sequential growth, supporting a positive outlook for the storage cycle. (1) Micron's CY26Q2 midpoint revenue guidance is $33.5 billion, up 41.1% quarter-on-quarter, with a midpoint gross margin of 81%, up 6.6 percentage points quarter-on-quarter. (2) SanDisk's CY26Q2 midpoint revenue guidance is $8.0 billion, up 34.5% quarter-on-quarter, with a midpoint gross margin of 80%, up 1.6 percentage points quarter-on-quarter. (3) Western Digital's CY26Q2 midpoint revenue guidance is $3.65 billion, up 10.6% quarter-on-quarter, with a midpoint gross margin of 51.5%, up 1.0 percentage points quarter-on-quarter. (4) Seagate's CY26Q2 midpoint revenue guidance is $3.5 billion, up 11.3% quarter-on-quarter.

Risk warnings: Potential slower-than-expected development and demand in the AI industry; lower-than-expected shipments of AI servers; and slower-than-expected technological and product progress by domestic manufacturers.