Goldman Sachs has issued a warning that the market is on the verge of the most severe memory chip supply shortage witnessed in the past 15 years.

According to information, the investment bank stated in a February 8th report that the global memory market will experience one of its most significant supply shortages historically during 2026-2027. The supply-demand gap is projected to widen substantially across three major categories: DRAM, NAND, and HBM. More critically, even under an extreme scenario where smartphone and PC demand plummets significantly, robust server demand is expected to absorb the impact and maintain a tight market structure.

Surprisingly, while publishing this bullish report on the memory sector, Goldman Sachs simultaneously downgraded Micron Technology to a Neutral rating, with a price target of $235. The rationale provided was that "most of the positive factors are already priced in." For investors, this suggests that while the memory industry's cyclical upturn appears certain, stock-specific valuation disparities are intensifying, making companies like Samsung Electronics and SK Hynix more attractive for portfolio allocation.

**DRAM Supply Gap Reaches 15-Year Peak**

Goldman Sachs has significantly raised its forecast for the DRAM supply shortfall. The latest projections indicate that the DRAM supply-demand gap will reach 4.9% and 2.5% in 2026 and 2027 respectively, far exceeding prior expectations of 3.3% and 1.1%. The 2026 shortage is anticipated to be the most severe in 15 years.

The core driver behind this tightening market is the explosive growth in server demand. Goldman Sachs increased its 2026/2027 server DRAM (excluding HBM) demand forecast by 6%/10%, anticipating growth rates of 39% and 22% for those years. When including HBM, server-related DRAM demand is projected to constitute 53% and 57% of global demand in 2026 and 2027, establishing servers as the most critical driver for DRAM demand.

In stark contrast, Goldman Sachs revised down its DRAM demand expectations for PCs and smartphones. Mobile DRAM demand growth is forecast to slow sharply to 7% in 2026 from high double-digit rates in recent years, while PC DRAM demand growth is expected at just 5%. The 2026/2027 mobile DRAM demand forecasts were cut by 7%/7%, and PC DRAM demand forecasts were reduced by 3%/5%, primarily reflecting the global team's lower shipment projections and reduced memory content per device due to rapidly rising memory costs.

On the supply side, Goldman Sachs expects global DRAM supply to grow by 21%/19% in 2026/2027, only slightly higher than previous forecasts. A key constraint is the limited cleanroom space available to major suppliers, hindering significant near-to-medium-term capacity expansion. Only Samsung's P4 fab possesses sufficient flexibility for meaningful new capacity additions, while SK Hynix's M15X cleanroom space is largely allocated to HBM production. Samsung's P5 and Hynix's Yongin fabs are unlikely to achieve volume production before the second half of 2027, suggesting limited upside for supply until then.

**NAND Market Faces One of its Largest Shortages Ever**

The supply-demand balance in the NAND market has also tightened considerably. Goldman Sachs projects NAND shortages of 4.2%/2.1% for 2026/2027, exceeding prior estimates of 2.5%/1.2%. This would rank among the largest shortages in the history of the NAND industry.

Strong growth in enterprise SSD demand is the primary catalyst. The firm raised its 2026/2027 enterprise SSD demand forecast by 14%/14%, anticipating growth rates of 58% and 23%, with its share of global NAND demand rising to 36% and 39% respectively. Analysts believe Nvidia's ICMSP architecture, unveiled at CES 2026, will generate substantial new NAND demand.

Based on configurations adding 16TB of storage per GPU and 512GB of onboard SSD per BlueField DPU, Goldman estimates the Rubin platform alone could contribute 29EB/79EB of incremental NAND demand in 2026/2027, accounting for 3%/6% of total demand. This aligns with commentary from SanDisk suggesting ICMSP could drive 75-100EB of new demand by 2027.

NAND demand from mobile and PC segments appears significantly weaker. Goldman Sachs cut its 2026/2027 mobile NAND demand forecast by 6%/7%, expecting zero growth in mobile NAND demand for the first time in 2026. The PC client SSD demand forecast was also trimmed by 1%/1%, with zero growth anticipated in 2026, marking historically low levels.

Supply discipline remains firm, with global NAND supply expected to grow 18%/18% in 2026/2027. Major suppliers are prioritizing DRAM capital expenditure, focusing NAND efforts on technology transitions rather than wafer capacity additions. Meaningful NAND wafer capacity increases are likely limited to Samsung's P4 fab and Kioxia's Kitakami fab, but both companies continue emphasizing migration to higher-layer 3D NAND.

**HBM Total Addressable Market Projection Raised to $75 Billion**

Goldman Sachs increased its HBM Total Addressable Market forecast for 2026/2027 by 8%/9% to $54 billion/$75 billion (from $50 billion/$69 billion). The revision primarily reflects improved HBM demand projections for GPUs and ASICs.

The acceleration in ASIC demand is particularly noteworthy. Aligning with the global team's view on the accelerated adoption of ASICs in servers, Goldman raised its 2026/2027 HBM demand forecast for ASICs by 27%/14%, compared to only a 1%/5% increase for GPU HBM demand. ASICs are expected to constitute 33%/36% of HBM demand in 2026/2027 (up from prior estimates of 28%/34%).

Regarding supply and demand, although Goldman raised its industry HBM capacity forecast due to faster capacity expansion by Samsung and SK Hynix, demand upgrades were more substantial. Consequently, the HBM industry is projected to face shortages of 5.1%/4.0% in 2026/2027, significantly higher than previous forecasts of 0.7%/1.6%.

Goldman Sachs expects industry HBM capacity to reach approximately 515,000 wafers per month by end-2026 (up from a prior forecast of 485,000), and 595,000 wafers per month by end-2027 (up from 565,000). Samsung's HBM business, following a 15% decline last year, is forecast to grow 157% in 2026, with revenue approaching $15 billion. After growing approximately 116% last year, SK Hynix's growth in 2026 is expected to be more moderate, yet it is projected to maintain a leading market share of about 52%.

**BOM Cost Analysis: Tight Conditions Persist Even in Extreme Scenarios**

Goldman Sachs conducted a detailed Bill of Materials cost analysis to assess the rising burden of memory costs and their potential impact on demand.

For smartphones, by the third quarter of 2026, DRAM and NAND costs for an iPhone are projected to reach about 23% of the total BOM, the highest level since 2010, compared to 10% in Q3 2025. Memory costs for the Samsung Galaxy S series are expected to reach approximately 29%, a significant increase from 13% in Q3 2025.

For PCs, using the Dell XPS series as a sample, memory costs are projected to reach 17% of the total BOM by Q3 2026, compared to 7% in Q3 2025.

Crucially, the analysis indicates that even under a highly negative scenario—featuring an 11% year-on-year decline in smartphone shipments (versus a base case of -6%), per-device DRAM content growth of only 9% (base case +14%), a 10% decline in PC shipments (base case -5%), and per-device DRAM content growth of only 5% (base case +10%)—DRAM demand growth in 2026 would still reach 21%, with an industry shortage of 1.7% remaining (compared to 4.9% in the base case).

This confirms that while higher memory costs could lead to demand destruction in PCs/smartphones and lower DRAM content adoption, given the significant supply shortage anticipated this year, the DRAM industry's supply-demand balance is expected to remain tight even under highly adverse conditions.

**Investment Recommendations: Samsung and Hynix Deemed More Attractive**

Goldman Sachs reiterated Buy ratings on Samsung Electronics, SK Hynix, SanDisk, Tokyo Electron, Ulvac, and Disco.

Samsung Electronics is viewed as a key beneficiary due to its significant exposure to the traditional memory market. Goldman forecasts traditional DRAM pricing to increase approximately 176-184% year-on-year in 2026, with operating margins reaching 71%/66% in 2026/2027, nearing historical peaks. Coupled with significant improvement in its HBM business, Samsung's operating profit is projected to surge over fourfold year-on-year in 2026, exceeding 180 trillion won, with ROE approaching 30%, a level not seen in two decades. The current share price implies a 2026 P/E of 7.4x and P/B of 1.9x.

SK Hynix is forecast to achieve unprecedented profitability levels—with DRAM operating margins nearing 80% and NAND margins exceeding 40% in 2026. Bolstered by its solid leadership in AI memory, the company's ROE is projected to surpass 70%, an all-time high.

In a surprising move, Goldman Sachs downgraded Micron Technology to Neutral with a $235 price target, citing that "most positive factors are already priced in." While acknowledging Micron's continued execution on its HBM product roadmap and an expected ~20% share in the fast-growing, high-margin HBM market, the firm believes risk-reward is roughly balanced at current valuation levels, and 2026 HBM pricing could face headwinds from increased supplier participation.

Regarding equipment stocks, Goldman highlighted Tokyo Electron's relatively high market share in leading-edge DRAM manufacturing tools, encompassing EUV coating/developing, capacitor etching, batch deposition, and supercritical dry cleaning tools. Among small-to-mid-cap stocks, Ulvac was emphasized as a key beneficiary of DRAM capital expenditure, particularly from Samsung. For back-end equipment, Disco remains favored, holding a dominant market share in HBM grinding and dicing tools.