Samsung Electronics and SK hynix [Yonhap]
Samsung Electronics and SK hynix [Yonhap]

Nomura Securities said Tuesday that memory chip demand will grow faster than supply at least through 2028, even as concerns mount over slowing revenue growth at AI companies and financing pressures on data center operators worldwide.

The Japanese brokerage named Samsung Electronics and SK hynix as top picks in its global memory chip report and maintained buy ratings on both companies.

Recent market concerns have centered on slowing revenue growth at major AI firms and the risk that financing difficulties at some data center operators could curb capital spending. Nomura said, however, that the earnings of individual AI companies alone are insufficient to gauge overall demand.

The brokerage also assessed as limited the risk that financing difficulties at data center operators would spill over into a broader halt in AI investment, noting that existing data centers and equipment can be taken over and used by other operators even if individual providers run into trouble.

Nomura cited data center capacity expansion as a key pillar supporting the outlook for both chipmakers. New global data center capacity tracked by the brokerage stands at 22.3 GW this year and 31.5 GW next year. On that basis, Nomura projected that memory chip demand will outpace supply, sustaining a price-friendly environment for the sector.

The combined net cash of nine chipmakers — including Samsung Electronics and SK hynix — is forecast to grow from $282 billion in the second quarter of this year to around $2 trillion by end-2028. Nomura attributed the expected buildup to semiconductor suppliers accumulating stronger financial capacity than data center operators over the course of the AI investment cycle.

Nomura set price targets of 670,000 won ($503) for Samsung Electronics and 4.7 million won for SK hynix.

The report cautioned, however, that if data center investment plans continue to be scaled back — or if even funded projects face delays — the memory demand outlook would need to be reassessed.

Nomura flagged rebound potential for Samsung Electronics, SK hynix in September

Samsung Electronics and SK hynix [Yonhap]
Samsung Electronics and SK hynix [Yonhap]

Nomura had already flagged a potential rebound for Samsung Electronics and SK hynix in a Sept. 4 report, saying both companies were positioned to stage a strong recovery on solid fundamentals.

In that report, Nomura maintained buy ratings on both stocks and kept its price targets unchanged — 670,000 won for Samsung Electronics and 4.7 million won for SK hynix.

The September report also diagnosed the two memory chipmakers as severely undervalued, noting their share prices had fallen roughly 37 percent from their peaks and were trading at an average of just three times their projected 2027 price-to-earnings ratio.

"The memory market is currently experiencing unprecedented demand strength driven by the AI investment cycle, while supply remains woefully inadequate," Nomura said. "Global memory production capacity needs to double to 7.2 million wafers per month within four years, and triple to 11 million wafers per month within six years, to keep pace with surging demand."

Nomura said that despite aggressive capacity expansion by Chinese chipmakers, the impact on overall supply and demand dynamics would remain limited, and that a supply shortage would persist through 2028.

The brokerage also argued that big tech companies' actual capital expenditure capacity was stronger than the market feared, and that a combination of a resilient memory market and active shareholder return policies would drive a full-scale revaluation of both stocks.


yul@heraldcorp.com