League of Nations Minsheng Securities: Continued optimism about this round of storage supercycle

The Zhitong Finance App learned that Guolian Minsheng Securities released a research report saying that it continues to be optimistic about the current storage supercycle. Strong AI demand, strengthened supply constraints, long-term cooperation locks in profits, and increased shareholder returns are jointly driving the profit center upward. On the demand side, AI training is evolving at an accelerated pace towards inference and agentic AI, which not only continues to drive HBM demand, but also significantly increases server DRAM and enterprise SSD configuration requirements. Storage requirements spread from a single HBM to a wider range of data center storage. At the same time, supply expansion is still relatively limited due to advanced manufacturing processes, packaging and capacity switching constraints, and DRAM and NAND prices are expected to continue to rise at a high base, and the price increase is clearly stronger than the traditional cycle.

On the supply side, leading storage vendors have secured procurement volume and price ranges for the next few years ahead of time through LTA/SCA. Micron has already received over 35% of pre-2030 revenue covered by the Changxie Association, and the visibility of industry profits has increased significantly. Supported by strong profits and free cash flow, storage companies' shareholder returns improved simultaneously, and Micron clearly proposed returning 100% of long-term excess cash to shareholders.

The bank believes that AI is driving the storage industry to re-evaluate from a strong cycle to “high boom+high determinity+high shareholder return”. Currently, it is still in the stage of improving profit expectations for the supercycle, and continues to be optimistic about the storage industry chain. Recommended attention: 1) AI chip NVDA, AVGO, MRVL, CBRS; 2) storage MU, SNDK, Samsung, Hynix, Kioxia; 3) MLCC Samsung Electric, Murata Manufacturing, Taiyo Yuden; 4) Carrier board IBIDEN; 5) CPU INTC, AMD, ARM, and Qualcomm.

The main views of the League of Nations Minsheng Securities are as follows:

TrendForce expects demand for AI servers to support the continued rise in 26q4 storage contract prices. TrendForce said that 26Q4 DRAM suppliers will still prioritize the allocation of advanced process production capacity to high-performance server products. The overall DRAM market will remain in short supply, but the rate of increase in contract prices is expected to slow down, and traditional DRAM prices are expected to rise 10-15% month-on-month. The NAND Flash market shows a fragmented pattern of accelerated AI demand and weak consumer demand. Prices in various market segments are still generally rising, and overall NAND Flash contract prices are expected to rise 15-20% month-on-month.

Overseas technology company updates

Micron released its FY26Q4 financial report. Revenue, gross margin and EPS all surpassed previous guidance. FY26Q4 revenue was $54.2 billion, up 379% year on year and 31% month on month; non-GAAP EPS was 33.42 US dollars, up 33% month on month; non-GAAP gross margin was 87%, up 2.1 pcts month over month. DRAM and NAND are rising in volume and price. DRAM revenue was 39.8 billion US dollars, up 27% month-on-month; bit shipments increased by mid-single-digit month-on-month, and prices rose about 20% month-on-month; NAND revenue was 14.1 billion US dollars, up 42% month-on-month; bit shipments increased by about 10% month-on-month, and prices increased by about 30% month-on-month. Data center SSD revenue is about $10 billion, accounting for more than two-thirds of NAND revenue. HBM's quarterly revenue growth rate is higher than the company's overall, and the vast majority of 2027 HBM bit supply agreements have been completed, and prices have increased significantly over the same period last year. FY27Q1 revenue and EPS continue to grow, and gross margin is expected to be low for the whole year. The company's guidance revenue was US$61.5 billion ± US$1.5 billion, with a median increase of about 13.4%; non-GAAP EPS was US$38.15 ± 1, with a median increase of about 14.2% month-on-month; non-GAAP gross margin was about 86.25%, a decrease of 0.75 percentage points month-on-month.

The size of the contract continues to expand, and the bottom line of forward sales volume and price has become more clear. The company has signed 26 SCA long-term agreements, which are expected to cover more than 35% of revenue up to 2030; about three-quarters of the estimated revenue agreements already have a clear price framework, and most have upper and lower price limits. Client financial commitments reached $32 billion, the vast majority being cash guarantees. Therefore, even if the contract is executed at the reserve price, the profit margin will still be significantly higher than the peak of previous cycles; at the same time, the pricing negotiations involving the New Growth Agreement are progressing at a higher price level. The management plans to increase the return on capital from December 9. It is expected that the cash balance at the end of FY27Q1 will be close to the target level. After that, surplus cash will be refunded mainly through repurchases, and plans to apply for additional repurchase authorizations. The long-term goal is to return 100% of excess cash to shareholders.

AMD will acquire World Labs to advance next-generation AI computing.

On September 28, 2026, AMD announced that it has signed a final agreement to acquire World Labs, an artificial intelligence model and research laboratory led by AI pioneer Dr. Li Feifei. The acquisition will bring AMD a world-class team of AI researchers and model experts, and further enhance AMD's ability to develop AI hardware, software, and systems around emerging AI models and application requirements. The transaction will be carried out using a full stock approach, with a transaction valuation of approximately US$8.2 billion. After receiving regulatory approval and other customary delivery conditions, the transaction is expected to be completed by the end of 2026.

Risk warning: AI development falls short of expectations; AI commercialization falls short of expectations; macroeconomic growth falls short of expectations, etc.