High energy ahead! AI ignites the storage chip super cycle. This fund manager, who outperformed 97% of his peers, bets on "storage" as the best theme.

With the unprecedented wave of global AI deployment, it is expected to drive chip demand - especially AI chips and storage chips are expected to continue their explosive growth trajectory over the next decade, with Eldorado Gold Corporation outperforming most of its peers globally, Divya Mathur, the emerging market stock fund manager at ClearBridge Investments, stated that storage chip stocks and high-end storage product stocks are the most promising areas to invest in the global stock market. As this seasoned fund manager praises storage chips as the best investment choice, Wall Street financial giants such as Morgan Stanley, Nomura, and Bank of America Corp have all called for the arrival of a "super cycle of storage chips" driven by the AI wave, and the intensity and duration of this cycle may far exceed that of the "super bull market driven by the cloud computing era" in 2018. The extremely bullish sentiment for storage chips among global investors has driven the benchmark stock index of the Korean market - the Kospi Korea Composite Index - to surge by 76% in 2025, making it the wildest stock market in 2025 globally. This is mainly due to the surging prices of two major heavyweights that collectively account for over 30% of the index - namely, global storage chip leaders SK Hynix and Samsung Electronics, whose stocks contributed to nearly half of the market's gains. As the only major storage chip manufacturer in the United States, Micron Technology, Inc.(MU.US) saw its stock price rise strongly, with a full-year increase of 240% in 2025. Its increase so far in 2026 has reached 18%. In addition, Western Digital Corporation (WDC.US), Seagate (STX.US) and SanDisk (SNDK.US), the three leaders in storage products, have also witnessed extremely strong increases since 2026, with full-year increases of over 200% in 2025. The demand for DRAM/NAND storage chips remains strong, and prices for storage product series (such as DDR4/DDR5/enterprise SSD series) are showing wild expansion trends, mainly due to the escalating demand for storage chips and the growing importance of storage chips for AI training/inference systems brought about by the surge in AI computing power. The global demand for AI computing power is showing an exponential growth trend, with supply falling far short of demand intensity - a fact that is clearly evident in the incredibly strong performance data announced on Thursday by the "Global Chip King" Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US). In the fourth quarter, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's gross margin broke through 60%, net profit far exceeded expectations, it is expected that full-year revenue growth in 2026 will be close to 30%, and the capital expenditure guidance for 2026 will be significantly raised to 52-56 billion US dollars, both core guidelines far exceeding market expectations. Furthermore, the management of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has revised the compound annual growth rate of revenue for chip contract manufacturing businesses closely related to AI from the original "mid-40%" to "mid-to-high 50%". The incredibly strong performance and future guidance of this global giant in chip manufacturing drove a collective surge in chip stocks on Thursday, with the strongest gains seen in storage chips and semiconductor equipment. This fund manager, who outperformed 97% of his peers, boldly bets on the "super cycle of storage chips" According to institutional compiled stock fund performance data, ClearBridge SMASh series emerging market stock investment fund, managed by Divya Mathur, has outperformed more than 97% of its peers in the past year. This fund has made significant bets on the storage chip giants Samsung Electronics and SK Hynix - whose stock prices doubled and nearly quadrupled respectively in 2025. Mathur believes that this bullish trend will continue in the long term, as he stated that the AI wave will permanently reshape an industry that has long been considered cyclical and commoditized. "Since the semiconductor era, the storage chip industry has never been built for the data storage needs of the AI field - but in the last year or so, we have witnessed this new growth DRIVE," said Mathur, a senior fund manager at the Edinburgh-based investment firm, who is one of the specialty fund managers at Franklin Templeton, jointly managing this emerging market stock investment fund with a size of approximately $1.4 billion. Since 2015, he has been a long-term holder of these two storage chip stocks and has become more confident and long-term in his bullish posture towards them. As shown above, the stock prices of Korean storage chip manufacturers are accelerating, with a strong upward trend expected to continue throughout 2026. The unparalleled "renaissance-style surge" of the Korean stock market in 2025 is a milestone in the global financial market, with the country's stock market recording its strongest gain in 25 years. Samsung Electronics and SK Hynix contributed to nearly half of the gains, while Korean nuclear energy companies were also major contributors to the gains. The bullish logic of storage and nuclear power can be said to both benefit from the massive demand for AI computing power brought about by AI training/inference systems. Furthermore, Wall Street analysts believe that there is still strong upside potential for the Korean stock market in the future, with top-tier brokers including Citigroup, JPMorgan Chase, and Nomura predicting that the benchmark stock index in Korea will rise by at least 20% in 2026. Analysts also add that the South Korean government's increased stimulus measures, coupled with the strong profit growth trend led by the "super cycle of storage chips," will continue to support the market's bullish trajectory. In 2025, the world's largest HBM storage system supplier, SK Hynix, had a record-breaking and brilliant year, continuing to be the largest supplier of HBM to the "AI chip superpower" NVIDIA Corporation (NVDA.US) and the AI CPU powerhouse Alphabet Inc. Class C (GOOGL.US) TPU AI power cluster. Samsung Electronics saw profits surge to record levels in the three months ending in December, primarily due to the surge in demand for massive AI computing infrastructure brought about by the surge in new construction and expansion of AI data centers, significantly increasing overall demand and sales prices for storage chips. Even as the stock prices of these storage chip leaders see unprecedented bull market trajectories and price increases in storage product lines reach levels above 50%, Mathur still believes that the market continues to underestimate the intensity of demand for storage chips driven by the momentum of AI infrastructure. "In addition, from the information I have received, some American tech clients have said that the storage industry is only in the second year of a ten-year super upgrade cycle." he said in an interview with the media. Furthermore, compared to their American chip stock counterparts, the valuations of Asian companies in the AI-related chip sector are still relatively reasonable. The latest statistics show that the forward price-to-earnings ratios of Samsung and SK Hynix are only 9.3x and 7x respectively, while the benchmark for U.S. semiconductor stocks - the Philadelphia Semiconductor Index is around 26x. Mathur also added that even in the storage chip sector, carefully selecting stocks with strong performance fundamentals is crucial. "The advantage of owning stocks in Samsung and SK Hynix is that they can compensate for any operational errors or delayed gains you may face," he said. "The last thing you want to happen in investment is to be sure about one area, but choose the wrong company - the one that fails to benefit from this trend." Wall Street's bullish sentiment on storage chips is becoming increasingly wild Whether it's Alphabet Inc. Class C's massive TPU AI power cluster or the large-scale NVIDIA Corporation AI GPU power cluster, both rely on fully integrated HBM storage systems carrying AI chips and the need for large-scale purchases of server-grade DDR5 storage and enterprise-grade high-performance SSD/HDD for rapidly expanding AI data centers. Samsung Electronics, SK Hynix, and Micron Technology, Inc. happen to dominate these three core storage areas: HBM, server DRAM (including DDR5/LPDDR5X), and high-end data center SSD, making them the most direct beneficiaries in the "AI memory + storage stack" and reaping the benefits of the AI infrastructure "super dividend". The construction of large-scale AI data centers around the world, with their critical need for storage components essential for AI training/inference systems, is now outstripping supply, benefiting companies like Micron. However, there is also a sharp shortage of storage products with lower technology and performance requirements for consumer electronics such as personal computers and smartphones, driving up prices of DRAM and NAND storage products. This is largely due to the storage industry shifting its capacity towards more advanced manufacturing technologies aimed at AI data centers. SK Hynix, Samsung, and Micron Technology, Inc., the three major players in the storage chip industry, have been placing most of their production capacity into HBM storage systems - these products require more advanced manufacturing processes and more complexity in manufacturing and testing compared to DDR series and HDD/SSD series storage chips, resulting in a severe shortage of these hard disk storage products. In addition, the giants in enterprise data storage products have seen strong gains, with Seagate, SanDisk, and Western Digital Corporation seeing stock price increases of over 200% in 2025, with enterprise-grade SSD storage systems leader SanDisk seeing a staggering 500% increase. These three storage chip and product leaders have significantly outperformed the U.S. market and even the global stock market. The core logic behind the strong performance of these three storage product giants lies in the construction boom of AI data centers driving not only the surging demand for HBM storage but also the synchronous expansion of the three-tier storage stack in AI data centers (hot layer NVMe SSD, warm/nearline HDD, cold layer object and backup), with the HDD industry oligopoly's long-standing supply restraint, NAND cycle warming, and cloud vendors locking in volume for years, allowing these three companies' visibility of volume, price, and orders to skyrocket simultaneously. A recent research report on the storage chip industry by the Japanese financial giant Nomura Securities shows that under the strong resonance and driving force of the massive increase in demand for high-performance server DRAM+HBM storage systems+data center high-performance SSD brought about by the accelerated construction of global AI data centers, the price slope of DRAM/NAND storage chips is becoming steeper. Nomura's analysts believe that this "super cycle of storage chips" that started in the second half of 2025 will last at least until 2027, and meaningful new supply is not expected to appear until the earliest in early 2028. Nomura indicates that investors should continue to overweight storage leaders in 2026, using pricing-profit-valuation as their main investment theme for storage in 2026, rather than viewing storage solely through the lens of HBM as a single theme. The institution expects the profits of the three major storage chip companies to reach historic highs. Nomura's latest assessment indicates that the institution reaffirms that this "super cycle of storage chips" will last until at least the end of 2027, and that meaningful supply increases will not appear until 2028 at the earliest. The report repeatedly emphasizes that expanding production capacity for storage chips and HDD/SSD storage components is not a matter of "expanding just for the sake of expansion," but rather involves a rhythm of upgrading greenfield/brownfield/customized semiconductor equipment. Taking SK Hynix as an example, Nomura precisely details constraints on production capacity ranging from cleanroom cycle/ wafer capacity, delays in yields brought about by advanced process upgrades, and restrictions on overseas chip factory construction/upgrades, leading to a slower increase in supply and a longer duration of shortage. Citigroup's analysts, in their latest outlook, show a more aggressive bullish stance than Nomura Securities on storage chips. They believe that with the drive of the widespread adoption of AI agents and the sharp increase in AI CPU memory demand, storage chip prices will experience uncontrollable increases in 2026. Citigroup's analysts have raised their expected average selling price (ASP) increases for DRAM in 2026 from a violent 53% to an even more aggressive 88%, and for NAND, the increase in ASP has been raised from 44% to 74%. Citigroup's analysts project that driven by the dual push of AI training and inference demands, the ASP of server DRAM in 2026 will skyrocket by 144% year-on-year (previously forecasted at +91%); for example, for the mainstream product 64GB DDR5 RDIMM, Citigroup predicts that its price will reach $620 in the first quarter of 2026, a 38% increase from the previous $518 prediction. In the NAND field, Citigroup's projections are similarly aggressive, raising the ASP growth estimate from +44% to +74% in 2026; among them, the ASP of enterprise-grade SSD is expected to increase by 87%. According to Citigroup's analysts, the storage chip market will enter an extremely intense seller's market, where pricing power will be entirely in the hands of storage giants such as Samsung, SK Hynix, Micron, and SanDisk.