Analysts warn AI memory chip rally may be nearing its peak as price growth slows
Global memory-chip stocks are losing momentum as price increases cool, despite sustained AI demand. Analysts caution that the sector's record profits may signal a late-stage cycle, with Chinese producers poised to add new supply. The boom, driven by data-centre spending on high-end memory, faces uncertainty ahead.
Institutional forecasts are turning cautious, with Morgan Stanley projecting the memory cycle will enter its late stage by the fourth quarter as price hikes slow and stockpiles grow. This sentiment is echoed by recent market movements, as shares of major manufacturers like Micron, SK Hynix, and SanDisk have pulled back from recent peaks.
Pricing data underscores the cooling trend, with Bernstein Research noting third-quarter contract prices for conventional DRAM are projected to climb only 17% sequentially, a steep drop from the 65% jump seen in the prior quarter. Simultaneously, UBS forecasts that China's CXMT will nearly double its monthly wafer capacity by 2028, expanding its global supply share from roughly 7% to 10%.
The potential cooling of the memory-chip rally could affect a broad range of stakeholders. Data-centre operators may face less severe cost inflation for high-end components, while investors could see reduced returns from semiconductor equities. Conversely, consumers might eventually benefit from stabilized prices for electronics. However, if Chinese supply expansion outpaces demand, it could trigger a price downturn, potentially squeezing profit margins for established manufacturers and leading to market volatility across the tech sector.