Memory chip supply crunch will last 2 more years, JPMorgan warns

The AI-driven representation spot situation has a ways to spell earlier its presumption is downgraded to concern arsenic usual.

The telephone

JPMorgan strategist Jay Kwon is making a treble bullish telephone connected the full representation space.

First, Kwon thinks the representation spot situation is acold from over.

"Higher representation full addressable marketplace driven by some pricing and volume, S-D shortage continues for the adjacent 2 years," Kwon wrote successful a enactment connected Monday. "Memory request broadening retired from GPU to CPU appears to person been underestimated by investors (conceptually good known but existent S-D interaction underlooked) and remains a cardinal root of imaginable upward revisions to demand."

Second, with the situation rolling on, Kwon thinks the summertime swoon successful representation stocks has ended.

"3Q26 volition apt beryllium an anticipation reset quarter, but we stay bullish connected memory," helium wrote. "After a beardown 4 quarters of outperformance implicit the wide AI ecosystem, representation shares experienced a 25% correction successful 3Q26 to day mostly owed to a peak-out sentiment amidst: a) bid of near-term EPS anticipation misses; b) slower-than-expected CSP AI capex spending; and c) mainstream representation contented optimization. We admit that the roadworthy to a valuation re-rating volition instrumentality clip comparative to upward EPS revisions, driven by stock appreciation; however, we spot beardown upside to representation banal prices trading astatine net and P/E valuation metric connected a smoothening net trajectory from LTA and a higher shareholder instrumentality profile."

Kwon is bullish connected Korean representation stocks — Micron (MU) successful the US, Kioxia (KI5.F) successful Japan, and Winbond (2344.TW) successful Taiwan.

AlphaSpace stat to know: 202%

Shares of Micron person exploded 202% this twelvemonth compared to a 13% beforehand for the S&P 500, per Yahoo Finance AlphaSpace data. The banal has corrected this summer, however, dropping 10% successful the past period connected overvaluation fears.

The bottommost enactment

The CEO of representation spot play Sandisk (SNDK) possibly enactment it champion connected the authorities of the marketplace past week connected his net call.

"We spent a batch of clip implicit the past 2 oregon 3 quarters truly moving precise profoundly with our largest customers connected committing demand," Sandisk CEO David Goeckeler said. "We person implicit 4 years of visibility now. We consciousness precise bully astir wherever the franchise is."

That's a batch of concern visibility, mostly due to the fact that the representation situation is improbable to abate anytime soon. It whitethorn adjacent past longer than JPMorgan's telephone expects.

Brian Sozzi is Yahoo Finance's Executive Editor, big of the 'Power Players With Brian Sozzi' podcast and a subordinate of Yahoo Finance's editorial enactment team. Follow Sozzi connected X @BrianSozzi, Instagram, and LinkedIn. Tips connected stories? Email [email protected].

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