Citi Research Dismisses Memory "Peak‑Out" Fears and Reaffirms Buy Ratings
Citi Research published a note stating that recent market anxiety over a cyclical downturn in dynamic random‑access memory (DRAM) and NAND flash memory is unfounded. The analysts highlighted that inventory levels across the memory ecosystem remain critically low compared with historic norms, with both memory suppliers and their customers holding materially depleted stocks.
The research quantified the supply‑demand sufficiency ratio for major manufacturers as having fallen from 70 % to 50 %, signalling that current production capacity is far below the volume of global orders. This undersupply environment, combined with a tight hyperscaler supply chain, is expected to keep pricing pressure upward.
AI‑Driven Demand Outlook
Citi projects that enterprise AI workloads will generate a new wave of demand. Growth in context‑memory‑extension (CMX) architectures, driven by key‑value (KV) cache requirements as autonomous AI agents gain traction, is forecast to lift NAND demand. The bank estimates CMX NAND demand will reach 34.6 billion 8‑Gb equivalents, representing roughly 2.8 % of total global NAND demand, and later expand to 115.2 billion 8‑Gb equivalents (about 9.3 % of global demand).
The note also references hardware trends such as Nvidia’s Vera Rubin architecture, which incorporates 16‑terabyte TLC SSDs for CMX operations and requires 1,152 terabytes of high‑speed SSD storage per Rubin server system. Additionally, Quad‑Level Cell (QLC) solid‑state drives are being adopted as near‑GPU storage solutions to alleviate data bottlenecks.
Stock Recommendations
Citi retained its Buy rating on Samsung Electronics Co Ltd (ticker 005930) and SK Hynix Inc (ticker 000660). Analysts cited Samsung’s dual exposure to high‑density NAND and advanced DRAM architectures, positioning it well for accelerating server deployments. SK Hynix, identified as a primary high‑bandwidth memory supplier for top‑tier GPU makers, is expected to benefit from the continued tightness in the hyperscaler supply chain.
At the time of reporting, Samsung shares were down 7.59 %, while SK Hynix shares fell 8.34 %, reflecting recent market pullbacks despite the bullish outlook presented by Citi.