Morgan Stanley: "Memory Stock Correction Nears End... Attractive Re-entry Opportunity"

"Share Buybacks and Other Shareholder Return Policies as Catalysts"


Target Price Maintained: SK hynix at 2.6 Million Won, Samsung Electronics at 375,000 Won

Morgan Stanley has assessed that the recent sharp correction in memory semiconductor stocks has largely run its course, viewing the current share price levels as an attractive re-entry point.

According to the investment banking (IB) industry on August 9, Morgan Stanley stated in its Asia technology stock report "Memory—a Small Dip," published on August 6, "It appears that the steepest correction witnessed in the memory industry thus far has come to an end," adding, "Current valuations offer an attractive tactical re-entry opportunity."

Morgan Stanley characterized the recent decline in share prices as a natural "small dip" occurring as part of the memory industry's maturing business cycle. In particular, the firm predicted that shareholder return policies such as share buybacks would serve as key catalysts for a subsequent rebound in stock prices.

However, Morgan Stanley did not maintain an unreservedly optimistic stance on the memory sector. It projected that, starting from the fourth quarter of this year, the pace of memory price increases would slow, and with both inventories and supply expected to rise, there could be less room to further raise earnings forecasts. Conversely, it maintained a positive outlook on capital expenditures related to artificial intelligence (AI) and shareholder returns.

By stock, Morgan Stanley maintained its price targets for SK hynix and Samsung Electronics at 2.6 million won and 375,000 won, respectively. However, forecasts for earnings per share (EPS) for fiscal year 2026 diverged; the EPS estimate for SK hynix was raised by 13% compared to the previous forecast, while the estimate for Samsung Electronics was lowered by 10%.

Shawn Kim, the Morgan Stanley analyst who authored the current report, previously garnered market attention in 2021 for his report "Memory, Winter Is Coming," which preemptively warned of a slowdown in the memory sector.

Meanwhile, Morgan Stanley also warned of the possibility of a short-term correction in memory stocks in early July. At that time, the firm diagnosed that the upward momentum in DRAM prices was nearing a peak, investors' positions in memory stocks were excessively concentrated, and leverage had also increased significantly.

This content was produced with the assistance of AI translation services.