Nomura forecasts that the memory 'super cycle' will extend until 2027, primarily driven by stronger-than-expected demand for AI servers and enterprise-level SSDs. As large-scale capacity expansion is not expected until 2028, the supply-demand gap will push DRAM prices significantly higher. Nomura has raised its profit forecasts for Samsung and SK Hynix, stating that the profitability of general-purpose memory has now matched or even surpassed that of HBM.
Nomura believes that the global memory industry's 'super cycle' will last longer than expected, driven by unexpectedly strong demand for DRAM from AI servers and a surge in enterprise solid-state drive (eSSD) demand. This upward cycle is projected to continue at least until 2027.
According to TradingView, in a report released on the 24th by Nomura analyst CW Chung's team, not only is the demand for high-bandwidth memory (HBM) remaining robust, but the demand for commodity DRAM in both AI and traditional server sectors is also showing explosive growth by 2026. This has prompted customers to adopt preemptive procurement strategies, driving suppliers to raise prices beyond Nomura's previous forecasts.
Given that large-scale capacity releases from the supply side are not expected until at least 2028, Nomura anticipates that the memory market will remain in a state of undersupply in the coming years. The firm forecasts that the operating profits of major memory manufacturers in the fourth quarter of 2025 will significantly exceed market consensus. Specifically, DRAM prices for PCs and mobile devices have increased by 30-40% quarter-over-quarter, while server DRAM prices surged by 40-60%.
In light of these positive developments, Nomura has reiterated its 'buy' ratings for Samsung Electronics and SK Hynix. The firm raised its target price for Samsung Electronics by 6.7% to 160,000 Korean won and for SK Hynix by 4.8% to 880,000 Korean won, stating that both companies remain attractively valued compared to industry peers and have approximately 45%-50% upside potential as profitability improves significantly.
AI Demand Reshapes Market Dynamics
Nomura believes that AI technology is reshaping the memory market far more profoundly than anticipated. While there have been some recent concerns about AI-related capital expenditure capabilities, global AI companies’ data center expansion plans have not slowed but instead exceeded expectations. In addition to the strong demand for HBM, forecasts for commodity DRAM demand in 2026 have also been surprisingly positive.
This robust demand is not only coming from AI servers but also from a surge in non-AI server demand for SSDs. Nomura notes that due to the spike in demand, memory customers have started building strategic inventory reserves, giving suppliers greater pricing power. By contrast, supply-side responses have lagged, with meaningful increases in supply not expected until at least 2028. This supply-demand mismatch forms the basis of Nomura’s prediction that the 'super cycle' will extend until 2027.
Nomura believes that the profitability of general-purpose memory chips is catching up rapidly and may even surpass that of HBM. While market focus has primarily been on HBM, Nomura estimates that the profitability of Samsung Electronics and SK Hynix’s general-purpose memory businesses already exceeds or is approaching their respective HBM operations.
Specific data shows that DRAM prices for consumer products (PCs and mobile devices) have increased by 30-40% quarter-over-quarter, while server DRAM prices rose by 40-60%. In the NAND sector, although price increases for mobile applications have been relatively moderate, enterprise SSD prices are expected to rise by 30-40% in the fourth quarter of 2025. Based on this, Nomura considers its earlier forecast of a 25% quarter-over-quarter increase in average commodity DRAM prices for the fourth quarter of 2025 to be overly conservative.
Supply Shortages and Flexible Product Mix
On the supply side, Nomura believes that the shortage situation will persist until 2027. Although investors have been closely monitoring capacity expansion plans of memory manufacturers, considering the timelines for new factory construction, expansions, and upgrade initiatives, the release of large-scale capacity will take time.
Previously, memory companies primarily allocated their capacity to HBM. However, with the rapid increase in profitability of general-purpose memory chips, Nomura expects manufacturers to adopt a more flexible approach to producing general-purpose products compared to before. This strategy not only maximizes profits but also enhances manufacturers' bargaining power when negotiating HBM prices with ASIC customers in the future. Nomura specifically noted that Samsung Electronics is expected to focus more on general-purpose products and the production of HBM4 for NVIDIA, while SK Hynix and Micron will also implement flexible product portfolio strategies based on their respective strengths.
Upward revision of earnings forecasts for two Korean giants
Based on the above market assessment, Nomura significantly raised its financial projections for the two major Korean memory giants, Samsung Electronics and SK Hynix.
Samsung Electronics: Nomura increased its operating profit forecast for the fourth quarter of 2025 by 22% to 21.5 trillion won and substantially raised its 2026 operating profit forecast by 21.5% to 133.4 trillion won (far exceeding Bloomberg's consensus expectation of 93 trillion won). Nomura believes that Samsung Electronics will benefit from the weakness of the Korean won and stronger-than-expected price increases for general-purpose DRAM, with its operating margin for general-purpose DRAM expected to surpass that of HBM significantly in the fourth quarter.
SK Hynix: Nomura raised its operating profit forecast for the fourth quarter of 2025 by 8.2% to 17.5 trillion won and lifted its 2026 operating profit forecast by 9.7% to 109 trillion won. Nomura expects that starting from the fourth quarter of 2025, SK Hynix's operating margin for general-purpose DRAM will exceed that of HBM, with the overall DRAM operating margin increasing by 6 percentage points quarter-over-quarter to 66%.
Nomura believes that the current valuation multiples of Samsung Electronics and SK Hynix remain lower than those of their memory peers. As these companies adopt aggressive shareholder return policies and disciplined capital expenditure, both are likely to undergo a revaluation.
Editor/jayden