According to Woofun AI, Bank of America (BAC.US) stated in its latest research report that memory stock valuations have already touched the bottom range of the cycle. Although SK Hynix and Samsung Electronics share prices have fallen sharply from their June peaks, based on 2027-28E consensus earnings per share, the price-to-earnings ratios of these two giants remain at only 2 to 3 times.

Bank of America (BAC.US) emphasized that this extreme undervaluation does not reflect a deterioration in fundamentals, but rather excessive market concern about an AI memory boom-bust cycle. The current pricing logic is significantly diverging from super-cycle-level earnings forecasts.

Breaking down the valuation logic, the core contradiction lies in the divergence between low multiples and high earnings. A report published on October 16, 2026 pointed out that memory stocks are currently in a super cycle, yet market sentiment has fallen into panic over an AI memory boom-bust scenario. Specific data shows that Samsung Electronics has a 2027E P/E of 3.0 times and a 2028E P/E of 2.8 times; SK Hynix has a 2027E P/E of 2.7 times and a 2028E P/E of 2.3 times, all far below the average of 4 to 7 times seen in previous upcycles, lower by 30% to over 50%. Meanwhile, the price-to-book ratio is close to 1.0 times 2027-28E net asset value per share, a level historically accompanied by DRAM average selling price declines of over 50% and large operating losses. However, current DRAM average selling prices are up 20% to 30% year-over-year, presenting completely different price conditions.

On the earnings front, although 2027 quarterly sequential growth is low and 2028 earnings per share decline by a single-digit percentage year-over-year, absolute sales, operating profit, and earnings per share remain near 2027 peaks and record highs. Data center AI memory replacement demand covers LPDDR5, SOCAMM, HBM, and eSSD, while more advanced GPUs and ASICs continue to drive up memory content per unit, supporting the earnings foundation. Data compiled by Woofun AI shows that even using softer 2028 earnings expectations, current valuations remain low, indicating that the recent correction is disconnected from memory fundamentals.

Historical cycle comparisons and bull-bear disagreements further reveal the characteristics of this pullback. SK Hynix fell 57% from its June peak to October, exceeding the average 51% correction over the past 20-plus years, and took only 4 months, shorter than the historical average of 15 months. Over the past 20-plus years, Hynix has risen an average of 621% from trough to peak, taking about 25 months; among these, it rose 1314% from 2003 to 2006 and 1696% from April 2025 to June 2026, showing that recovery is stronger after each major downturn. The current 2027-28E P/E of 2 to 3 times rarely appears outside of cycle bottoms. At an investor conference held in Singapore, hedge funds were bearish while most long-term investors were bullish. Bearish arguments include high borrowing costs for new cloud providers, increased DRAM supply from China's 4F² process, declining memory content per GPU, and a potential slowdown in AI capital expenditure or memory price growth. Bank of America (BAC.US) responded point by point: China's 4F² impact is limited, AI startups and new cloud providers have large backlogs, and even under softer average selling price assumptions after 2026, memory chipmakers still maintain high margins and return on invested capital (ROIC). Additionally, 2027-28 dividends plus buybacks could reach over 10% of current market capitalization. The global memory total addressable market (TAM) is projected to grow from nearly $1.0 trillion in 2026 to over $2.0 trillion by 2030, with operating profit potentially reaching $1.0 trillion and industry market capitalization potentially reaching $10 trillion, versus only a few trillion dollars currently, implying enormous upside.

Recent data validation and outlook show that strong fourth-quarter guidance and import-export data corroborate demand resilience. Nanya Technology has issued bullish 4Q guidance, and Bank of America (BAC.US) expects SK Hynix's October 28 4Q guidance to show rising average selling prices and margins. 12-layer sixth-generation HBM4 production is ramping strongly, with additional 8-layer output from new orders; despite the recent 40 trillion won buyback, a special cash dividend may still be paid. October industry data is not weak: PC DRAM contract prices for DDR5 and DDR4 rose over 15% month-over-month; spot prices remained stable even as US Treasury yields rose; South Korea's semiconductor exports reached $12.2 billion in the first 10 days of October, down 26% month-over-month but near record highs; China's August memory imports totaled $37.3 billion, accounting for 57% of total imports, up 277% year-over-year. China's September integrated circuit imports reached $71.7 billion, up 75% year-over-year, exceeding $70 billion for the first time. Memory imports and semiconductor exports both point to demand that has not collapsed, and fourth-quarter guidance and price data provide fundamental support for the valuation bottom. Bank of America (BAC.US) concludes that the deep correction resembles a cycle bottom, but has not shifted into a downturn. Memory stock valuations are already priced for a cycle bottom, and whether fourth-quarter guidance can pull fundamental confirmation back to an upward trajectory is the variable to watch next.