Morgan Stanley’s ‘Memory Winter’ Bear Says It’s Time to Buy After Chip Selloff

Morgan Stanley once warned of a ‘memory winter’

‘A small bump in the cycle’

‘Shareholder returns, including buybacks, are a catalyst’

Morgan Stanley said the sharp correction in memory-chip stocks appears to be over, calling current levels an attractive point for a tactical re-entry.

The bank said in an Aug. 6 Asia technology report titled “Memory — A Small Bump” that “the steepest correction seen so far in the memory industry appears to be over” and that valuations offer “an attractive tactical re-entry opportunity,” according to the investment-banking industry on Aug. 9.

Morgan Stanley characterized the pullback as a natural “small bump” as the memory cycle matures. It also cited shareholder returns, including share buybacks, as a key catalyst for further gains.

From the fourth quarter of this year, however, the pace of memory-price increases may slow as inventories and supply rise, the bank said. That could reduce room for further upward revisions to earnings forecasts.

Morgan Stanley remained positive on artificial-intelligence capital spending and shareholder returns. It maintained its price targets on SK Hynix Inc. and Samsung Electronics Co. at 2.6 million won ($1,880) and 375,000 won ($271), respectively. The bank raised its fiscal 2026 earnings-per-share forecast for SK Hynix by 13% from its previous estimate, while cutting Samsung Electronics by 10%.

Sean Kim, the Morgan Stanley analyst who wrote the report, had previously warned of a memory-market slowdown in a 2021 report titled “Memory, Winter Is Coming.” Early last month, Morgan Stanley also warned of a possible short-term correction in memory shares, saying the acceleration in DRAM price gains was nearing a peak and that investor positioning and leverage in the sector had become excessive.

Park Su-bin, Hankyung.com reporter waterbean@hankyung.com