CLSA Calls Memory Pullback a Buy, Sees $1.3 Trillion 2027 Revenue

Global memory industry revenue is set to climb 42 percent to $1.3 trillion in 2027, and the recent pullback in memory stocks offers a buying opportunity for Samsung Electronics, SK Hynix and Micron Technology, CLSA said in a report.

"Memory demand growth will outpace supply growth from 2027 to 2028," the broker wrote, pointing to continued artificial-intelligence capital expenditure, expanding AI applications and improving monetization as the drivers.

CLSA forecasts global DRAM wafer capacity to rise from 1.95 million wafers a month at the end of 2025 to 2.9 million in 2028 and 3.9 million in 2030. Because new fabrication plants and yield improvements take several quarters to materialize, supply growth will lag demand over the next three years. The share of DRAM capacity allocated to high-bandwidth memory (HBM, the stacked chips feeding AI processors) is expected to climb from 20 percent in 2025 to 28 percent in 2028. HBM consumes three to four times the wafer capacity of conventional DRAM, and next-generation products carry lower yields, keeping the overall DRAM market in short supply through 2028.

Long-term supply agreements now cover 60 to 70 percent of planned production, with prepayments and binding purchase commitments attached, reflecting suppliers' stronger bargaining power. CLSA projects memory industry revenue of $927 billion in 2026, $1.3 trillion in 2027 and $1.5 trillion in 2028.

Suppliers Hold Pricing Power as LTA Adoption Spreads

Even with supply-demand conditions expected to stay tight in coming quarters, suppliers are unlikely to raise average selling prices sharply, CLSA said. The growing use of long-term agreements should support high profitability and drive further valuation re-rating across the group.

The report also pushed back on concerns about NAND demand. Enterprise solid-state drives for data centers now account for nearly half of NAND bit shipments, and the spread of AI inference and AI agents is lifting demand further. As suppliers prioritize the more profitable DRAM and HBM segments, NAND supply discipline is being maintained, supporting resilient pricing.

Buybacks and Fabs Define the Memory Trade

The report lands as memory names rebound from a sharp selloff. SK Hynix approved a 40 trillion won ($28.6 billion) treasury share cancellation, the largest in South Korean history, sending its shares up 6 percent to $164.70. Micron climbed 3 percent to $967.93 and SanDisk rose 5 percent to $1,703, while the Roundhill Memory ETF (DRAM) gained 4 percent to $57.26.

The buyback wave is running alongside record fab spending. SK Hynix last week approved 54 trillion won for two new plants, one for DRAM in Yongin and one for NAND in Cheongju, with first cleanrooms opening in late 2028 and 2029. The company reported second-quarter revenue of 79.3 trillion won, up 257 percent from a year earlier, with an operating margin of 76 percent, and began mass shipments of HBM4 during the quarter.

What the Concentration Means for Investors

The Roundhill Memory ETF holds 73 percent of its assets in just three companies — Samsung at 25.0 percent, SK Hynix at 24.2 percent and Micron at 23.8 percent — so the fund magnifies both the upside from AI-driven demand and the downside from any pricing rollover. Investors weighing the ETF should size positions with that concentration in mind.

The tension for the sector is real. SK Hynix is committing enormous capital to buybacks at the same time it is spending on new fabs, and investor Cathie Wood has said she is steering clear of memory stocks, arguing memory is becoming increasingly expensive and will push engineers toward AI systems that need less of it.

For investors, the CLSA view hinges on whether record margins hold. Samsung's chip division posted a 70 percent operating margin in the second quarter, with Device Solutions contributing 89.2 trillion won of the group's 89.5 trillion won operating profit. Analysts remain bullish — the 37-analyst consensus on Samsung carries 36 Buy ratings and a mean target of 470,156 won, a 75 percent premium to its 268,500 won close. Micron's buyback stays capped by CHIPS Act terms until December, making its post-December capital-return posture the next test of whether the memory group's buyback wave has legs.

This article is for informational purposes only and does not constitute investment advice.