Credit Lyonnais Securities Asia (CLSA) Position on Micro Technology (MU)
CLSA Ltd. (formerly known as Credit Lyonnais Securities Asia) is a capital markets and investment group focused on alternative investment, asset management, corporate finance and capital markets, securities and wealth management for corporate and institutional clients.
CLSA stated that the memory industry has recently undergone an adjustment due to macroeconomic headwinds, with rising bond yields and geopolitical factors putting pressure on the recovery of memory stocks, but it maintains a positive outlook on the memory industry's prospects.
The firm considers the recent pullback a buying opportunity, benefiting from sustained AI capital expenditure, as well as rising AI applications and monetization capabilities. The firm expects memory demand growth to outpace supply growth from 2027 to 2028.
Memory suppliers are committed to sustaining current profitability for a longer period, making them reluctant to significantly raise average selling prices (ASPs) even as the supply-demand balance is expected to remain tight over the coming quarters. Together with the rising adoption of long-term agreements (LTAs), this should support high levels of profitability and drive further upward valuation revisions. The firm is bullish on Samsung Electronics, SK Hynix, and Micron.
The firm further noted that despite market concerns over the NAND demand outlook, strong demand for enterprise SSDs in data centers now accounts for nearly half of NAND bit shipments. Coupled with the rising adoption of AI inference and AI agents driving NAND demand, and suppliers prioritizing the expansion of higher-margin DRAM/HBM to maintain NAND supply discipline, prices are expected to remain resilient.
The firm projects global memory industry revenue to grow by 42% to $1.3 trillion in 2027 and by another 14% to $1.5 trillion in 2028, up from $927 billion in 2026.
Micron Technology (MU) Undervalued And Primed To Hit $1,200 - $1,500 In 8 - 12 Weeks Time
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