Morgan Stanley analyst Joseph Moore recommended on the 20th (local time) that investors buy memory semiconductor stocks during recent price corrections, forecasting supply shortages will persist through 2028. Moore stated the current memory semiconductor cycle is driven exclusively by strong AI datacenter demand, creating an unusual market dynamic distinct from past patterns. The supply shortage stems from AI infrastructure buildout concentrating demand in datacenters while consumer electronics markets show mixed recovery signals, causing temporary stock price weakness that Moore characterized as a buying opportunity.
AI Datacenter Demand Creates Market Anomaly in Memory Semiconductor Cycle
Moore analyzed that the ongoing memory semiconductor cycle is "highly unusual compared to conventional past patterns because it is driven solely by strong artificial intelligence (AI) datacenter demand." He explained that because the market cycle is entirely concentrated on datacenters, mixed signals are appearing in consumer electronics, PC, and smartphone markets regarding demand recovery, creating what he termed "false flags." Moore stated these uncertainties negatively impacted spot market prices and inventory levels at various points, serving as the main cause pulling down memory semiconductor stock prices in recent days.
Moore emphasized that "current memory semiconductor stocks have strong buying interest from the market, and considering the unusual characteristics of this datacenter-driven cycle, short-term downturns are inevitable," but added "we view this stock weakness as an excellent buying opportunity." He assessed that "among the companies we currently analyze, NVIDIA and Broadcom are clearly the top preferred stocks with the best risk-adjusted returns, but memory semiconductor companies that recently experienced price corrections are rapidly narrowing the gap with them, providing investors with a good entry point."
Memory Chip Supply Shortage Expected to Intensify Through 2028
Moore reported that actual supply-demand conditions in the industry field are much tighter than market concerns. Referencing conversations he had directly with large-scale datacenter purchasing managers last week, Moore conveyed that "there were no signs whatsoever that the intensity of the memory semiconductor shortage currently spreading in the market will ease." He pointed out that "the most important core issue to watch in the market now is that long-term concerns about memory semiconductor shortage intensifying further in 2027 and 2028 are forming stronger than ever."
Morgan Stanley Predicts Q3 Memory Chip Prices to Rise Minimum 25%
Based on datacenter buyer feedback, Moore predicted that "Q3 memory semiconductor prices are expected to rise at least 25% or more compared to the previous quarter on an equivalent basis." This price increase forecast reflects the tight supply conditions Moore identified through direct industry conversations, indicating continued pricing power for memory chip manufacturers through the current shortage cycle.
FAQ
What did Morgan Stanley recommend regarding memory semiconductor stocks on the 20th (local time)?
Morgan Stanley analyst Joseph Moore recommended that investors buy memory semiconductor stocks during recent price corrections, stating the temporary weakness presents a buying opportunity given forecasted supply shortages through 2028.
Why does Morgan Stanley expect memory chip shortages to continue through 2028?
Moore stated the shortage is driven exclusively by strong AI datacenter demand, creating an unusual market cycle concentrated entirely on datacenter infrastructure buildout. He noted that long-term concerns about shortages intensifying in 2027 and 2028 are forming stronger than ever based on current supply-demand dynamics.
How much does Morgan Stanley predict memory chip prices will rise in Q3?
Moore predicted Q3 memory semiconductor prices will rise at least 25% or more compared to the previous quarter on an equivalent basis, based on conversations with large-scale datacenter purchasing managers confirming tight supply conditions.
