Storage chip stocks with 80% margins get hammered 45%, JPMorgan says P/E is just 3.6x—what exactly is the market afraid of?

Storage chips have been one of the hardest-hit sectors in recent days. SK Hynix and Samsung just reported quarterly operating margins as high as 80%, yet their shares closed down 9.46% and 7.57%, respectively, while Kioxia fell 13.14%. A JPMorgan report shows that major storage stocks have fallen an average of about 45% from their 2026 highs. The average 2027 forward P/E of six major storage companies is only about 3.6x, while the average CAGR of forecast EPS from 2026 to 2028 reaches 98%.‌‌

Record results, valuations crushed to the floor, and growth close to doubling—all three conditions are in place at once. In theory, this is a textbook case of an “unjustified sell-off.” But the market doesn’t see it that way. What the market fears is hidden in two details.

The first detail: price hikes are slowing. TrendForce data shows that conventional DRAM contract prices rose 58% to 63% in the second quarter of 2026, with the quarter-on-quarter increase narrowing to 13% to 18% in the third quarter and falling further to 10% to 15% in the fourth quarter. Storage makers’ profits are driven mainly by price increases, so a smaller increase means the pace of quarter-on-quarter earnings growth will also slow. The market trades on “marginal changes,” not “absolute levels.”‌

The second detail: demand is under pressure. Counterpoint data shows that global smartphone shipments fell 20% year over year in Q3 2026, the lowest level for that period since 2012. Qualcomm’s handset chip business revenue fell 26% year over year, and management explicitly said this reflected the impact of memory conditions on the smartphone market. When storage chip prices rise, someone ultimately has to pay. With smartphone and PC sales sluggish, even strong AI server demand may not fully offset the contraction in consumer demand.‌

JPMorgan expects industry fundamentals to remain strong through 2028. Samsung expects DRAM tightness to persist through 2028, while SK Hynix believes the supply shortage could last until 2030. But the report also warns that without clear near-term catalysts, storage stocks could continue trading in a range, and improving fundamentals may not immediately drive a share price rebound.‌

That’s the biggest contradiction in the storage sector right now: the long-term thesis is intact, short-term sentiment has collapsed, and in between is a gap of time with no clear answer to “when will we see price increases accelerate again?” Gate Stock Chat Season doesn’t require you to pinpoint the exact bottom. You just need to decide whether you believe in the long-term storage thesis, then put it into your own words. Post with #Gate股票畅聊季 , and let’s talk through this timing gap together.
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