While market attention remains fixated on AI-driven high-bandwidth memory (HBM), a new Morgan Stanley research report offers critical insights for investors seeking non-crowded trades.

Analysts Daniel Yen and Charlie Chan, leading the firm’s Greater China tech semiconductor team, highlighted in their December 4 report that the "traditional memory" market is brewing a perfect storm of supply-demand imbalance. For investors hesitating whether to cash in on recent gains, Morgan Stanley’s conclusion is unequivocal: The cycle has only just begun, and exiting now would be premature.

**Not the Time to Take Profits** Morgan Stanley first predicted in late Q2 this year that supply shortages in traditional memory would drive a "supercycle." This forecast is now materializing, with contract prices rebounding by late Q3. Historically, pure traditional memory upcycles last 3–4 quarters, suggesting the current momentum is far from exhausted.

The report bluntly states that 2026 earnings estimates may still be overly conservative:

*"This is not yet the time to take profits… Consensus earnings expectations for 2026 could see very meaningful upside."*

**DDR4 & NOR’s "Wild" Pricing Dynamics** The most striking data in the report comes from the extreme divergence in DDR4 pricing. Driven by enterprise demand, preliminary DDR4 contract negotiations heavily favor suppliers.

Morgan Stanley projects Q1 2026 contract prices could surge over 100%. Current supply tightness is staggering, particularly for 16Gb DDR4 products, where channel inventories are near zero. This shortage has led to a dramatic disconnect between spot market prices and DRAMeXchange benchmarks:

*"Spot prices have reached $100, while DRAMeXchange shows a spot price of just $45.5."*

Meanwhile, production cuts are cascading into Flash products. With lower wafer value and rising back-end testing costs, NOR Flash suppliers are reallocating capacity elsewhere. Morgan Stanley forecasts NOR’s supply gap will widen from low-to-mid single digits to "high single digits" by 2026, driving prices up over 20% in Q1 next year.