Morgan Stanley: Storage short-term correction, but still sees 35%-40% earnings growth in 2027.

Shenchao TechFlow News: According to Chaoxiang Research, Morgan Stanley’s Asia-Pacific Storage Technology Flash Report on July 6 noted that storage is approaching the peak in the rate of change for year-over-year price movements, inventory, and the breadth of earnings revisions. In the short term, stock prices may face pressure, but the AI-driven storage bull market is far from over. In 2027, industry earnings are still expected to grow by 35% to 40%. Concerns in the market about excess computing capacity at leading cloud vendors may be overinterpreted. The real direction depends on whether mega-scale vendors maintain capital expenditures during the Q2 earnings season. After long-term supply agreements were announced, the stock price has not been re-rated, reflecting the market’s memory of LTA turning into an inventory burden during the pandemic. What is needed is to see actual execution rather than the agreements themselves.

Morgan Stanley recommends looking for opportunities in DRAM and traditional storage, while avoiding module manufacturers. Samsung Electronics’ second-quarter operating profit is expected to be about 85 trillion won, while SK Hynix’s is expected to be about 65 trillion won—both meeting market expectations.