Institutional analysts: Valuations of South Korean storage stocks are approaching reasonable levels, and the market’s profit expectations for the storage sector may be overly optimistic.

Independent research firm TS Lombard’s report indicates that South Korean storage chip stocks are valued near fair levels, though market expectations for storage companies’ future earnings may still be overly optimistic. Quarterly growth in traditional DRAM contract prices slowed from 93%–98% in the first quarter to 58%–63% in the second quarter; TrendForce projects it will further decelerate to 13%–18% in the third quarter. The spot market is stabilizing, with DRAM and HBM prices also starting to fall. The report points out that long-term supply agreements provide a floor for sales volumes and prices, but also limit suppliers’ ability to continue raising prices, and related protections will gradually weaken over the next year, making it difficult to support further large upward adjustments to earnings expectations. For HBM, 2026 annual contract price hikes lag behind traditional DRAM, and HBM’s first-quarter earnings were even lower than those of 64GB DDR5 RDIMMs. While larger chip sizes and wafer resource competition in 2027 theoretically should boost suppliers’ bargaining power, more players are entering the market: ChangXin Memory Technologies has begun sampling, global trackable DRAM capacity is projected to reach around 2.1 million units per month by the end of 2026, and TSMC has also entered the HBM4 base chip and packaging segments. Current consensus market expectations peg storage companies’ 2027 EPS growth at 36%–40%, but TrendForce forecasts unit supply growth of only 15%–20%. TS Lombard believes that current share prices of Samsung Electronics and SK Hynix largely reflect a scenario where 2027 earnings are 40%–50% lower than the market consensus, with valuations near fair levels, though storage cycle risks have not fully dissipated.