Micron Plunges 22% in a Week: Is the Window Open to Buy the Dip in Memory Chips? BofA Bets the Super Cycle Will Last Through 2028

Title context: Micron Plunges 22% in a Week: Is the Window Open to Buy the Dip in Memory Chips? BofA Bets the Super Cycle Will Last Through 2028 Text: After global AI computing-themed stocks, especially popular semiconductor stocks related to memory chips, experienced a sharp recent pullback, top research institutions such as Wall Street financial giant Bank of America Corp, Nomura, and well-known market research platform TrendForce provided new fundamental growth basis for buying on dips: the high levels of revenue and profit in the memory chip industry may be more durable than current stock prices reflect. In the week ended November 6, Micron fell about 22% cumulatively, and then the rebound was hit by higher-than-expected inflation and rate hike expectations, creating a sharp contrast between the valuation adjustment in memory stocks and industry prosperity. Bank of America's latest judgment provides a fundamental basis for buying on dips: even using price increase assumptions lower than TrendForce's and considering price corrections for some products in 2027, global memory industry revenue is still expected to reach US$1.47 trillion and US$1.58 trillion in 2027 and 2028, respectively, continuing to drive record-level revenue and profit extension. What supports the bullish forecasts of top Wall Street investment institutions such as Bank of America Corp is arguably the RSI-led AI training paradigm, the continued expansion of AI agent applications around efficient AI inference processes driving demand for HBM, server memory, and enterprise SSDs, while advanced processes, capacity conversion, and yield ramp constraints limit supply release, and long-term supply agreements further improve sales visibility. The potential "buy-the-dip investment value" brought by this sharp pullback in AI computing and semiconductor stocks depends critically on whether the market's pessimistic discount for "peak earnings" far exceeds the actual degree of supply-demand deterioration: if memory leaders can continue to deliver cash flow and shareholder returns, the low valuations after the sharp decline may become a new starting point for repositioning in the memory super cycle. Bank of America Corp expects global memory industry revenue to increase from US$970 billion in 2026 to US$1.47 trillion in 2027 and US$1.58 trillion in 2028, growing about 51.5% and 7.5% in the latter two years, respectively. Even using price increase assumptions significantly lower than TrendForce's, BofA analysts still judge that the memory industry is expected to extend record-level revenue and profit through 2028. At the same time, after Micron and SanDisk suffered a sharp selloff last week and a rebound on Monday, they were hit again on Tuesday by inflation and rate hike expectations. However, it is worth noting that the extent of this pullback was clearly milderthe VIX fear index even fell from 19.92 to 19.46, largely indicating that the market is reassessing the pressure from the Federal Reserve's rate path and has not repeated last Thursday's panic selling. These signs arguably highlight that the market seems to be re-weighing whether the profits created by supply shortages can continue to offset the valuation pressure brought by rising rates and adjustments to AI capital expenditure expectations. BofA Firmly Expects the Memory Super Cycle to Last Through 2028 In its latest research report bullish on memory chip-themed companies, Bank of America Corp's strategist team cited the view of TrendForce senior analyst Avril Wu that the current upcycle in the memory chip industry may last through 2027 and avoid entering a downcycle in 2028. Speaking at a webinar hosted by BofA on November 10, Wu said memory chip prices may continue to rise, and she expects DRAM and high-bandwidth memory prices to increase 10% to 20% quarter over quarter in the fourth quarter of 2026, while NAND flash prices will rise 8% to 13%. She also expects HBM prices to more than double in 2027, while long-term supply agreements may help reduce price volatility after 2028. BofA generally agrees with this optimistic industry outlook but adopts more conservative price assumptions. The firm expects DRAM prices to rise 8% quarter over quarter in the fourth quarter and NAND prices to rise 3%, with price corrections possibly beginning earlier in 2027. The firm's strategist team also expects HBM price increases of less than 50% in 2027, in contrast with TrendForce's judgment that prices will more than double. BofA strategists also said their latest forecast data show global memory industry revenue will reach US$970 billion in 2026, US$1.47 trillion in 2027, and US$1.58 trillion in 2028, indicating that the industry is expected to sustain record revenue and profit levels through 2028. As Meta Muse and OpenAI's GPT-6 Astra fully ignite the massive AI agent wave, the "AI FOMO trade" (referring to investors' fear of missing out on gains in AI-related assets, and therefore chasing buys or rebuilding previously reduced positions) is expected to continue. From the underlying architecture of AI computing infrastructure, Muse and Astra are expected to further expand the scope of AI agent use. The massive expansion of AI inference workloads they bring will simultaneously increase demand for model inference, tool execution, and state management, while also deepening competitive pressure on some software companies. From a technical mechanism perspective, AI agents expand a single answer into repeated reasoning, retrieval, tool execution, and state preservation. GPUs and TPUs handle model computation, CPUs handle tools and task orchestration, HBM holds data for high-bandwidth access, server DRAM carries the runtime environment, and SSDs and HDDs serve high-performance access and high-capacity retention, respectively. At the same time, network infrastructure, high-speed optical interconnects in data centers, power supply, and cooling determine the actual utilization of expensive accelerators. Therefore, accelerating cloud revenue can support multiple hardware segments at once; how much profit a specific company captures still depends on performance advantages, supply bottlenecks, and bargaining power. For the epicenter of the AI trade and tech stock selloffnamely the hard-hit memory chip sectoroptimism on market fundamentals remains strong. In addition to Bank of America Corp's research report offering optimistic earnings and memory price increase trends, KeyBanc's recent Asia survey data show that AI data centers are still absorbing memory and other AI computing resources on a broad scale, driving price increases through 2027. After surveying Asian markets, KeyBanc forecasts that blended HBM prices may rise sharply by 80%100% in the first quarter of 2027. On DRAM memory prices, KeyBanc forecasts a quarter-over-quarter increase of 15%20% in the fourth quarter of 2026 on top of the strong price increase base in the third quarter, and another 10%15% increase in the first quarter of 2027; for future NAND pricing, it forecasts a quarter-over-quarter increase of about 20% in the fourth quarter of 2026 on top of the strong third-quarter base, and another 10%15% increase in the first quarter of 2027. Memory Rebound Hit Again by Rate Hike Shock: Stocks First Trade Inflation and Continued Fed Rate Hike Risks, but Earnings and Orders Are Still Accelerating On November 5 Eastern Time, the Nasdaq 100 index plunged 6.36%, the largest single-day drop since March 2020, with constituents collectively losing about US$2.3 trillion, a record single-day market value loss; the Philadelphia Semiconductor Index plunged 12.25%. After Democrats won control of both chambers of Congress, investors worried that stricter AI regulation, data center approvals, and electricity cost-sharing requirements could delay the commissioning of computing projects and chip procurement. These policy concerns, combined with existing high valuations and crowded positioning, amplified the market's repricing of the timing of AI investment returns. The memory sector arguably suffered a deeper sharp pullback. Based on closing prices from October 30 to November 6, Micron and SanDisk fell 22.01% and 27.44%, respectively, while Samsung Electronics and SK Hynix fell about 16.13% and 20.17%, respectively, all weaker than the roughly 4.91% and 12.15% declines in the Nasdaq 100 and the Philadelphia Semiconductor Index over the same period. On November 9, global tech stocks broadly rebounded, with the Nasdaq 100 and the Philadelphia Semiconductor Index rising 3.40% and 6.85%, respectively, while Micron and SanDisk rose 6.25% and 6.16%, respectively. Funds bought memory leaders again, but this rebound has not yet offset previous losses, also showing that the "cash flow safe haven" view put forward by some Wall Street analysts is a judgment on operations and valuation and cannot be directly equated with short-term stock price resilience. Tuesday's inflation data again raised the bar for a rebound. US October headline and core CPI rose 0.4% and 0.3% month over month, respectively, both above market expectations of 0.3% and 0.2%, with core CPI rising 0.3% for a third consecutive month. Waller said before the data release that if core CPI reached 0.3% or higher, a 50-basis-point rate hike in December should be considered. After the data release, the market's pricing for such a larger hike rose to about 11.8%, but 25 basis points remained the mainstream expectation; bets on cumulative hikes through mid-2027 increased from two 25-basis-point hikes to three, including this December. Deutsche Bank Aktiengesellschaft also added a January rate hike expectation between its existing December and March forecasts. The logic behind extended Fed rate hike expectations is that employment and economic growth remain resilient, while service prices, energy cost pass-through, and AI construction demand jointly maintain inflation pressure. For memory chip stocks, higher rates both raise the discount rate on future profits and may increase customers' financing costs and lengthen data center construction cycles. On Tuesday, the Nasdaq 100 and the Philadelphia Semiconductor Index fell about 0.60% and 0.35%, respectively, while Micron and SanDisk fell about 1.1% and 3.0%, respectively: this also shows to some extent that the market continues to absorb rate repricing without repeating last Thursday's decline. Can the Memory Super Cycle Survive the Valuation Cold Wave? The Key Is How Long the High-Profit Numbers Can Be Sustained The common judgment of institutions such as BofA, TrendForce, and KeyBanc is that memory prosperity still has support, with differences concentrated on the magnitude of price increases and the timing of corrections. TrendForce expects DRAM and HBM prices to rise 10%20% quarter over quarter in the fourth quarter and NAND to rise 8%13%, while BofA forecasts only 8% and 3% for DRAM and NAND, respectively; for 2027 HBM, the former expects prices to more than double, while the latter expects an increase of less than 50%. A more conservative price path can still support revenue and profit at high levels, meaning that BofA strategists' optimistic bullish judgment also depends on substantial shipment growth, product upgrades, and order continuity. This is also the most investment-relevant part of BofA's view that the "memory super cycle will last through 2028." Technical support comes from AI systems' simultaneous demand for different memory tiers: HBM provides high-bandwidth data supply for GPUs and ASICs, server DDR5 supports main memory demand, and enterprise SSDs handle data retention, retrieval, and caching. At the same time, HBM and traditional DRAM compete for limited advanced process and wafer resources, and new product yield and packaging output ramp takes time. It is worth noting that TrendForce's earlier forecast of a 121% increase in blended HBM average selling prices in 2027 also includes a higher proportion of more expensive HBM4 and the introduction of HBM4e, and cannot be understood as a broad doubling of prices for all products of the same specification. Long-term agreements are improving demand visibility. SK Hynix recently disclosed that it has signed long-term agreements with 14 major customers, typically with five-year terms, and the contracted volume already covers more than half of its 20272028 capacity. Contract prices adjust within agreed ranges with the market, so long-term agreements mainly enhance visibility for capacity utilization, sales, and profit rather than completely locking in future profits. For capital-intensive memory chip companies, this change helps reduce mismatches between capacity expansion and customer procurement. BofA analyst Vivek Arya's team recently explained the current opportunity from the stock price cycle: as of November 5, the Philadelphia Semiconductor Index had fallen about 38% from its June high, exceeding the average drawdown of about 32% in the past four major downturns; however, the 136-day adjustment period was only about 54% of the historical average of 253 days. BofA analyst Vivek Arya's team sees early 2027 as a window when the selloff may end, based on the fact that stock prices typically lead actual sales downturns by 69 months. The forward P/E ratio has fallen to 13.7x, about a 22% discount to the S&P 500, showing that pessimistic expectations have already been largely priced in; however, BofA also estimates that if AI capital expenditure in 2027 is 20% below expectations, related chip companies' earnings per share could face 35%40% downward revision pressure. Nomura's CW Chung team places more emphasis on cash flow allocation: cloud providers bear upfront construction investment, while memory suppliers accumulate cash through scarce products and price increases. Based on the stock prices and earnings forecasts used in its report, Samsung and SK Hynix had 2027 expected P/E ratios of about 3.2x and 2.8x, respectively; supply tightness continuing into 2028, more long-term agreements, and expanded shareholder returns are the basis for its view that the market has overly discounted them. Citi analyst Atif Malik also reiterated on October 29 a "Buy" rating and US$1,300 target price for Micron, arguing that investors underestimate the extent of continued DRAM and HBM supply tightness in 20272028, while customer long-term agreements enhance revenue visibility. Morgan Stanley analyst Shawn Kim's latest adjustment reveals another layer of disagreement: a November 9 report raised 2027 operating profit forecasts for Samsung and SK Hynix but cut target prices by 19% and 38%, respectively, while maintaining "Overweight." His concern is that if new capacity released at the end of 2027 coincides with delays in data center deliveries, longer-term margins will be pressured. This shows that institutional debate has extended from whether money can be made now to how many years high profits can be sustained. Overall, taking into account supply and demand, long-term agreements, and valuation changes, this sharp pullback in memory chip stock prices and valuations has created a more fundamentally grounded buy-the-dip window for leaders with strong HBM competitiveness, server-grade high-performance DRAM/NAND product portfolios, and cash accumulation capacity. Investment value depends to a large extent on how much free cash flow companies can retain after more conservative price and margin assumptions. If demand materializes, product upgrades, and shareholder returns continue to validate earnings resilience, the current discount for "peak earnings" may become the source of the next round of re-rating. Based on closing prices in their respective markets on November 10, recently verifiable institutional target prices still imply substantial upside for memory leaders. US memory chip giant Micron (MU.US) closed at US$724.77, and BofA continued to maintain a "Buy" rating and US$1,550 target price on November 9, implying potential upside of about 113.9%; Citi maintained "Buy" and a US$1,300 target price on October 29, implying about 79.4% upside. Both institutions emphasized DRAM and HBM supply constraints in 20272028 and the support from long-term supply agreements for sales and earnings visibility. For SanDisk (SNDK.US), Morgan Stanley maintained an "Overweight" rating and US$1,750 target price on October 30, implying about 103.5% upside from the November 10 closing price of US$859.91, bullish on data center demand growth improving its business mix while using cross-cycle earnings to measure valuation. The latest ratings on South Korea's two memory giants reflect institutional stances of "remaining bullish on near-term earnings while reassessing long-term margins." In its November 9 report, Morgan Stanley cut the target price for Samsung Electronics common shares from KRW381,000 to KRW309,000 and cut SK Hynix's target price from KRW2.6 million to KRW1.6 million, maintaining "Overweight" on both; based on closing prices of KRW198,900 and KRW1.212 million on November 10, respectively, the potential upside is 55.4% and 32.0%, respectively. The firm also raised 2027 operating profit forecasts for both companies, with the target price cuts mainly stemming from a reassessment of new supply around 2028, data center delivery pace, and long-term margins.