📋J.P. Morgan: Memory Giants Market Cap Points to $1.5T (+50%) by 2027

Source: This article is adapted from analysis shared by Jukan ✈️Semicon Japan (@jukan05) on X (Twitter), based on J.P. Morgan’s latest memory industry research.

1. Market Cap Nearing $1 Trillion — Is the Rally Over?

In its latest research report, J.P. Morgan $JPMorgan Chase(JPM)$ highlights that the combined market capitalization of leading global memory manufacturers is approaching $1 trillion. Based on historical valuation medians, JPM projects that this figure could expand to $1.5 trillion by 2027, implying over 50% upside potential from current levels for top-tier memory players.

From an equity investor’s perspective, this framing is important: JPM is not merely forecasting earnings growth, but arguing that the entire valuation framework of the memory sector is undergoing a structural re-rating, driven by AI-led demand.

On December 14, JPM further emphasized that the current memory cycle is shaping up to be the longest and strongest up-cycle in industry history.

2. Supply Concerns vs. AI Reality: Why 2027 Oversupply Fears May Be Overstated

A key concern among investors is that new capacity coming online in 2027 could trigger DRAM oversupply. JPM directly addresses this bearish thesis using a bottom-up data model and concludes that such fears are largely unfounded.

HBM crowding-out effect: Capacity is increasingly diverted to High Bandwidth Memory (HBM), limiting supply growth for conventional DRAM.
AI inference demand: JPM notes that AI inference workloads consume roughly 3× more memory than training, creating sustained structural demand.

For investors, this suggests that headline capex announcements alone are insufficient to assess future supply risks—product mix and end-demand matter more than raw wafer capacity.

3. “Dual-Track” Pricing: Enterprise Strength Offsets Consumer Weakness

JPM observes that the memory market is entering a dual-track pricing environment:

B2B / Enterprise / AI: Strong demand from cloud service providers (CSPs) continues to support elevated pricing.
B2C / Consumer: Cyclical pressure remains, with price sensitivity limiting upside.

However, JPM’s core view is that server-side demand growth will more than offset consumer softness, keeping the overall pricing environment constructive. For equity holders, this reinforces the idea that exposure to AI-facing memory suppliers matters more than broad consumer electronics cycles.

4. Valuation Reset: Why JPM Says “Stay Long”

With memory stocks having surged over the past three months and market cap nearing $1 trillion, JPM addresses the key investor question: What comes next?

Their answer is unambiguous: Stay Long.

Using a Market Cap / TAM (Total Addressable Market) framework:

JPM estimates the memory market will reach ~$420 billion in size by 2027.
Applying the median P/S multiple of 3.5× from prior cycle peaks (2018, 2021),
The combined market cap of leading memory and storage companies could approach $1.5 trillion.

This implies more than 50% upside from current levels, assuming the cycle unfolds as modeled.

5. Supply–Demand Reality Check: Still Tight in 2027

The dominant short thesis argues that new fabs and accelerated process migration will flip the market into oversupply by 2027. JPM strongly refutes this using a “Capacity-Bit” analysis:

Shortage persists: The supply-demand gap may narrow from 5% in 2026 to 3% in 2027, but remains in deficit.
HBM penetration rises: HBM’s share of total DRAM capacity is expected to jump from 19% (2025) to 28% (2027).
Physical constraints: Despite new fabs (e.g., $SAMSUNG ETFS TR.(SGCRF)$ , $SK Hynix, Inc.(HXSCF)$ $SK Hynix, Inc.(HXSCL)$ , cleanroom limits and process complexity cap DRAM bit growth at <20%.

From an investment standpoint, this supports the thesis that pricing power may weaken at the margin—but does not collapse.

6. B2B Feast, B2C Cycle: Pricing Outlook by Segment

JPM expects pricing polarization from 2H 2026 to 1H 2027:

B2B (AI-driven): Prices remain firm, supported by inference workloads.
B2C (Consumer): Cyclical price declines due to resistance at elevated levels.

Key Forecasts:

FY26E: DRAM ASP +53%; NAND ASP +30%
FY27E: DRAM ASP +1%; NAND ASP -6%

This suggests a transition from explosive upside to high-level consolidation, rather than a classic cycle downturn.

7. AI Structural Drivers: HBM and Enterprise SSD in Focus

HBM (High Bandwidth Memory) JPM highlights HBM as a major beneficiary of ongoing GPU vs. ASIC competition:

Google’s next-gen 2nm TPU may adopt HBM4 $Alphabet(GOOG)$ $Alphabet(GOOGL)$
Rubin Ultra GPUs imply a 4× memory capacity increase
JPM expects an 8–12% HBM supply gap to persist through 2027, potentially extending into 2028

Enterprise SSD (eSSD) AI inference servers require ~3× the SSD capacity of traditional servers.

With HDD vendors guiding conservatively on 2026 capex, JPM expects eSSD demand to surge, pushing NAND prices up ~27% in FY26.

For investors, these segments represent structural growth exposures, not cyclical trades.

8. Capex Discipline: Expansion Without Excess

While memory makers have announced expansion plans, JPM stresses that bit supply growth remains disciplined:

WFE outpaces capex: DRAM WFE growth of 19% (2026) and 26% (2027)
Capital intensity remains controlled:
- DRAM: <30%
- NAND: <20% Both below the 5-year average.

This reinforces JPM’s central thesis: the industry has learned from past cycles, and supply discipline is likely to persist.

Takeaway for Investors

JPM’s message is clear: the memory sector is no longer just a cyclical rebound story—it is undergoing a structural re-rating driven by AI. While volatility and segment divergence remain, the bank believes the path toward a $1.5 trillion market cap by 2027 is still intact.

Discussion:

Do you agree with J.P. Morgan’s view that this will be the strongest and longest memory up-cycle in history?
From an investor’s perspective, which segment offers better risk-reward over the next 12–24 months: HBM leaders or NAND / eSSD beneficiaries?
With consumer demand still cyclical but AI server demand accelerating, how would you position memory stocks in your portfolio today—core holding or tactical trade?

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