World funding financial institution (IB) Morgan Stanley offered a goal value of 144,000 received for Samsung Electronics. The agency additionally projected that in a bull market situation, the inventory might rise to as excessive as 175,000 received.
Morgan Stanley made this evaluation in its report titled “Reminiscence–Most Pricing Energy” on Nov. 10 (native time), stating that “DRAM costs have surpassed all-time highs.”
Whereas Morgan Stanley had beforehand maintained a detrimental outlook on reminiscence semiconductors by means of studies comparable to “Winter looms” and “Reminiscence — The Iceberg Looms,” the agency modified to a constructive view beginning this 12 months, suggesting it could possibly be “A Heat Winter This Yr.”
The premise for this shift is the reminiscence semiconductor tremendous cycle.
Morgan Stanley evaluated that “new value peaks sometimes result in new inventory value peaks, and this time there are substantial earnings to assist this.”
The agency continued, “The long-term progress drivers of synthetic intelligence (AI) stay stable, reminiscence value will increase are in uncharted territory, and contemplating the energy of the cycle, earnings prospects are fairly brilliant.”
The agency significantly famous that “everyone seems to be competing to construct AI infrastructure and develop functions, instruments, and companies primarily based on it,” whereas judging that “we’re nonetheless within the early levels.”
Certainly, reminiscence costs are rising quickly. DDR5 (16Gb) spot costs, which had been $7.5 in September, have now surged to $20.9, representing a 336% improve. This determine far exceeds expectations.
Morgan Stanley acknowledged, “Whereas we haven’t but reached the height server DRAM costs (at present $1 per Gb, in comparison with $1.25 per Gb in Q1 2018), this might function a reference level for gauging potential upside,” and projected that “contemplating the size of AI infrastructure funding and hyperscale buyer dynamics, peak costs will exceed the early 2018 cloud tremendous cycle highs.”
Concerning home reminiscence firms, the agency famous, “We preserve a constructive outlook on SK Hynix (000660),” whereas evaluating that “Samsung is predicted to guide in upward earnings forecast revisions, giving it comparatively larger desire.”
Morgan Stanley offered Samsung Electronics’ working revenue forecast for subsequent 12 months at 116.448 trillion received. The semiconductor division (DS) is predicted to report earnings of 94.625 trillion received. For 2027, the agency estimated complete working revenue at 135.22 trillion received, with the DS division at 109.896 trillion received.
Morgan Stanley acknowledged, “The goal value stays unchanged at 144,000 received, making use of an anticipated 2026 P/B ratio of 1.95x,” and estimated that in a bull market, it might rise to as excessive as 175,000 received.
The goal value for SK Hynix is 730,000 received, with potential to succeed in 850,000 received in a bull market situation.
Morgan Stanley defined, “Reminiscence funding is straightforward,” noting that “throughout cycle upturns, margins develop, inventory costs rise, firms generate large earnings, and buyers profit from excessive returns.”
The agency continued, “The important thing query is whether or not reminiscence sector earnings will proceed to extend by means of 2027,” explaining that “this will depend on the state of affairs in mid-2026.”
Morgan Stanley concluded, “One unchanging reality is that to seize these returns, buyers should proceed investing,” that means “enduring the discomfort and volatility which can be inherent traits of reminiscence cycles and sustaining positions amid market fluctuations.”
