Citi: AI will drive a surge in memory demand 2026 or face a “shortage of supply”

The Zhitong Finance App learned that investment agency Citi said on Tuesday that due to a surge in demand for memory in the artificial intelligence (AI) sector, this key technology product may be “in short supply” in 2026.

In a report to customers, Citigroup analysts stated, “We expect that both dynamic random access memory (DRAM) and NAND flash memory will be in short supply in 2026. Among them, the supply-demand ratio for DRAM is expected to be -1.8%, and the supply-demand ratio for NAND flash memory is expected to be -4.0%.

We believe that as AI demand shifts from the “AI training” stage to “AI inference” and edge AI devices, the demand for general server memory, mobile device DRAM, and high-bandwidth, high-density NAND flash memory (such as enterprise-grade solid-state drives ESSD based on QLC technology) will increase significantly.

Despite rising demand for traditional memory, memory vendors are still prioritizing investment in high-bandwidth memory (HBM), at the expense of traditional memory production capacity investment. As a result, we expect the overall memory market's supply-demand relationship to tighten in 2026, which in turn will put upward pressure on memory prices.”

Based on this judgment, Citi reaffirmed its “buy” ratings for Micron Technology (MU.US), SanDisk (SNDK.US), Samsung, and SK Hynix.

According to further analysis by Citi, DRAM supply and demand are expected to increase by 17.5% and 20.1%, respectively, in 2026, which highlights the risk of imbalance in this category; in terms of NAND flash memory, supply is expected to increase 16.5% year on year in 2026, while demand will increase by up to 21.4% year on year, so the gap between supply and demand is also significant.

Analysts also added that in 2026, fab equipment spending is expected to increase 11.1% year over year. The core logic of this increase is that memory vendors are likely to continue to lean resources towards high-bandwidth memory (HBM) rather than traditional memory. Specifically, capital expenditure (capex) in the DRAM sector is expected to increase by 12.2% year on year in 2026, and capital expenditure in the NAND flash memory sector is expected to increase by 9% year on year.