Morgan Stanley Warns AI Memory Stock Boom Is Nearing End, Sideways Trading May Follow
The expansion of AI server capacity has fueled demand for HBM and DRAM, making memory stocks a focus for investors as supply-demand conditions improve and prices recover. Morgan Stanley said industry fundamentals remain solid, but crowded positioning and the long-term risk of chip price deflation could cause share-price momentum to cool before earnings growth does.
Morgan Stanley warned in its latest report that the explosive rally in memory stocks is nearing an end and that they could follow Nvidia's pattern of strong fundamentals but prolonged sideways trading. The related coverage did not disclose the report's publication date, price targets or monetary figures, shifting the focus to stock selection and the need for investors to assess HBM competitiveness and the durability of earnings.
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The history behind this eventAI Demand Fuels Memory-Chip Stock Rally, Analysts Warn of Boom-Bust Risk
Generative AI has expanded rapidly since ChatGPT launched in December 2022, fueling demand for high-bandwidth memory and expectations of supply shortages. That has positioned companies including Samsung Electronics and SK hynix as major beneficiaries of AI infrastructure spending. But memory chips trade much like commodities, leaving prices and profits vulnerable to sharp reversals when supply and demand fall out of balance and raising questions about whether the stock rally can last.
As of May 25, 2026, Samsung Electronics and SK hynix had risen 114% and 186%, respectively, since the start of the year, while Micron had gained 141%. BlueBox Asset Management warned of a boom-bust cycle, while Standard Chartered advised taking some profits. New plants are expected to begin mass production from late 2027 to 2028. Nomura, meanwhile, set 12-month price targets of 4 million won for SK hynix and 590,000 won for Samsung.
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