Micron Technology(US:MU)2026-02-04 02:31Summary of J.P. Morgan Global Memory Market Update Industry Overview - Industry: Global Memory Market - Focus: Semiconductors, specifically DRAM and NAND memory segments Key Insights 1. Memory Total Addressable Market (TAM) Growth: - Memory TAM is projected to increase by 42%-48% for FY26-27E, reaching approximately US$616 billion by 2027E, with a significant upside potential for market capitalization of around 50% [4][6][53]. 2. NAND Memory Upside Risk: - NAND memory is identified as having the largest upside risk to TAM estimates over the next 12 months, driven by its critical role in the AI ecosystem [4]. 3. AI's Impact on Memory Market: - The share of AI in the memory market is expected to rise to ~45% by 2027E, up from mid-30% in 2025A, with server customers contributing 70-80% of AI memory revenue [4]. 4. Growth Rates Comparison: - AI NAND is forecasted to grow at a 108% CAGR from 2024A to 2027E, outpacing AI DRAM's 91% CAGR due to NAND's recent value proposition in AI models [4]. 5. High Bandwidth Memory (HBM) Supply-Demand Dynamics: - HBM supply-demand is expected to remain tight until 2027E, with a projected double-digit percentage shortage entering 2026E, which may lead to increased average selling prices (ASPs) for HBM [5][4]. 6. Capital Expenditure (Capex) Trends: - A significant capex increase is anticipated in 2026E, with DRAM and NAND capex expected to grow 31% and 10% year-over-year, respectively [6]. 7. Valuation Methodology Discussion: - There is a debate on whether to switch memory valuation methodology from price-to-book (P/B) to price-to-earnings (P/E) due to improved earnings visibility and demand [6]. 8. Downside Risks: - Key risks to the bullish outlook include potential AI capex slowdowns, breakthroughs in AI algorithms that reduce memory consumption, and increased supply from Chinese memory suppliers [6]. Investment Recommendations - Positive Outlook: The memory sector has shown strong performance, with memory stocks up 187%, DRAM up 180%, and NAND up 907% over the last six months [6]. - Preferred Stocks: - Overweight (OW) recommendations on SEC, SK Hynix, Kioxia, Winbond, and Micron, with a cautious stance on TCB supply chains due to rising competition [6]. Additional Insights - Market Dynamics: The memory market is characterized by tight supply-demand conditions, particularly for HBM, which is expected to maintain high ASPs due to ongoing demand from AI applications [5][4]. - Future Projections: The memory market is anticipated to continue evolving with significant contributions from AI, indicating a robust growth trajectory through 2027E and beyond [4][6].