Nomura believes that the global memory industry's "super cycle" will persist longer than anticipated, driven by unexpectedly strong demand for DRAM from AI servers and a surge in enterprise solid-state drive (eSSD) demand, with this upward cycle expected to continue at least until 2027.
According to Nomura analyst CW Chung's team in a report dated the 24th, not only is High Bandwidth Memory (HBM) demand remaining robust, but demand for commodity DRAM in both AI servers and traditional servers is also showing explosive growth trends projected for 2026. This is prompting customers to initiate preventative purchasing strategies, thereby pushing suppliers' price increases beyond Nomura's previous forecasts.
Given that meaningful large-scale capacity expansions from the supply side are not expected until 2028 at the earliest, Nomura anticipates the memory market will maintain a supply shortage for the coming years. Nomura predicts the operating profits of major memory manufacturers in the fourth quarter of 2025 will significantly exceed general market expectations. Specifically, prices for PC and mobile DRAM have increased 30-40% quarter-over-quarter, while server DRAM prices have surged by 40-60%.
Benefiting from these positive factors, Nomura reaffirmed its "Buy" ratings on Samsung Electronics and SK Hynix. Nomura raised its target price for Samsung Electronics by 6.7% to 1.6 million won and increased its target price for SK Hynix by 4.8% to 880,000 won, stating that the valuations of both companies remain attractive compared to industry peers, with potential stock price upside of approximately 45%-50% as profitability improves significantly.
AI demand is reshaping the market landscape. Nomura asserts that AI technology's impact on reshaping the memory market far exceeds initial expectations. Although there are recent minor concerns about AI capital expenditure capacity, global AI companies' data center expansion plans have not slowed but have instead surpassed forecasts. Beyond the widely noted strong HBM demand, the demand forecast for commodity DRAM in 2026 is also surprisingly positive.
This robust demand stems not only from AI servers but also from a surge in SSD demand from non-AI servers. Nomura points out that due to the demand surge, memory customers have begun strategic inventory stocking, which grants suppliers greater pricing power. In contrast, the supply side's response is relatively lagging, with meaningful supply increases not expected until 2028 at the earliest. This supply-demand mismatch is the primary basis for Nomura's judgment that the "super cycle" will last until 2027.
Nomura believes the profitability of commodity memory chips is rapidly catching up to and may even surpass that of HBM. Although market focus was previously concentrated on HBM, Nomura estimates that the profitability of Samsung Electronics' and SK Hynix's commodity memory businesses has already exceeded or is approaching their respective HBM businesses.
Specific data shows that DRAM prices for consumer products (PCs and mobile devices) have increased 30-40% quarter-over-quarter, while server DRAM prices have surged 40-60% quarter-over-quarter. In the NAND sector, although price increases for mobile applications are relatively moderate, enterprise SSD prices are projected to rise 30-40% quarter-over-quarter in Q4 2025. Based on this, Nomura considers its previous forecast of a 25% quarter-over-quarter increase in average commodity DRAM prices for Q4 2025 to be overly conservative.
Supply shortages and flexible product mix. On the supply side, Nomura believes the shortage situation will persist until 2027. Although investors have been closely monitoring memory manufacturers' capacity expansions, considering the timelines for new fabs, expansions, and upgrades, large-scale capacity releases will take time.
Previously, memory companies primarily allocated capacity to HBM, but with the rapid improvement in commodity memory chip margins, Nomura expects manufacturers to produce commodity products more flexibly than before. This strategy not only maximizes profits but will also strengthen manufacturers' bargaining power in future HBM price negotiations with ASIC customers. Nomura specifically mentioned that it expects Samsung Electronics to focus more on commodity products and producing HBM4 for NVIDIA, while SK Hynix and Micron will also adopt flexible product mix strategies based on their respective strengths.
Upgraded profit forecasts for the two Korean giants. Based on the above market assessment, Nomura significantly raised its financial forecasts for the two major Korean memory giants, Samsung Electronics and SK Hynix.
Samsung Electronics: Nomura raised its Q4 2025 operating profit forecast by 22% to 215 trillion won and substantially increased its 2026 operating profit forecast by 21.5% to 1,334 trillion won (far exceeding the Bloomberg consensus estimate of 930 trillion won). Nomura believes Samsung Electronics will benefit from a weak Korean won and stronger-than-expected commodity DRAM price increases, with its commodity DRAM operating margin expected to significantly surpass that of HBM in the fourth quarter.
SK Hynix: Nomura raised its Q4 2025 operating profit forecast by 8.2% to 175 trillion won and increased its 2026 operating profit forecast by 9.7% to 1,090 trillion won. Nomura expects that, starting in Q4 2025, SK Hynix's commodity DRAM operating margin will exceed that of HBM, with the overall DRAM operating margin increasing by 6 percentage points quarter-over-quarter to 66%.
Nomura believes the current price-to-earnings multiples for Samsung Electronics and SK Hynix remain lower than their memory industry peers. As the companies adopt aggressive shareholder return policies and disciplined capital expenditure, they are poised for a valuation re-rating.