Memory is diverging: BofA says DRAM remains firm, while NAND has quietly weakened.

Memory is diverging: BofA says DRAM remains firm, while NAND has quietly weakened. The memory chip market is shifting from "broad-based gains" to "divergence." BofA believes the price-hike logic for DRAM has not yet been broken, while NAND spot prices have clearly loosened and will become the first product in this memory upcycle that needs to be repriced. BofA's November 13 report shows NAND spot prices have fallen significantly, with 512Gb wafers down more than 10% and 1Tb down nearly mid-single digits, while 16Gb DDR5 spot prices were flat. Since mid-to-late October, NAND spot prices have cumulatively corrected by about 20%. Based on this, BofA maintains a cautious assumption for NAND average selling prices in Q1 2027: IT NAND prices down 5% to 10% quarter-on-quarter, enterprise applications basically flat or slightly up, with an overall low-single-digit decline. This view stands in clear divergence from the market's expectation of NAND price increases of more than 10%. Meanwhile, BofA still assumes DRAM price increases continue into Q4 2026 (up 8% QoQ) and Q1 2027 (up 5%). BofA said that after conversations with investors this week, sentiment on memory stocks has improved from last week, and companies with higher DRAM weighting are seen as having limited downside. Most DRAM names currently trade at only 3x to 5x P/E on 2026-2027 earnings, well below AI semiconductor peers. Three signals of NAND spot weakness BofA attributes NAND concerns to three points: spot prices have corrected about 20% since mid-to-late October; orders from PC and smartphone OEMs as well as Chinese hyperscalers have weakened; and Q1 2027 contract price negotiations may be delayed, with no rush orders appearing in the market. The divergence in spot data is quite. According to DRAMeXchange, 512Gb wafer spot is quoted at US$14.3, down 12% week-on-week and down 32% quarter-on-quarter, but still up 121% year-on-year; 1Tb is at US$24.9, down 4% week-on-week, down 19% quarter-on-quarter, and up 194% year-on-year. By comparison, 16Gb DDR5 is at US$60.2, flat week-on-week and up 150% year-on-year. Original manufacturers still emphasize strong enterprise SSD demand, which can offset IT NAND weakness to some extent. But BofA cautions that legacy production lines account for 20% to 30% of global wafer capacity and are not suitable for producing high-end NAND and eSSD, yet still need to be continuously used for IT NAND, creating structural pressure on prices. Per-bit prices for high-capacity NAND (above 2Tb) and eSSD (above 30TB) have been slightly lowered, but BofA views this more as proactive promotion by manufacturers to push the new QLC generationNAND prices for most eSSD are still trending slightly upward. The divergence: contract prices remain high, but negotiations may be delayed NAND contract prices and spot prices are currently diverging. According to TrendForce, the October contract price for 1Tb TLC wafers was basically flat quarter-on-quarter, extending the sideways pattern from Q2 to Q3; the 512Gb contract price is about US$27, near a historical high and roughly ten times the February 2025 low of US$2.5. BofA's concern is timing: if downstream buyers continue to hold off on rush orders, Q1 2027 contract price negotiations may be pushed back, weakening manufacturers' bargaining power in the new round of pricing talks. This view directly corresponds to its expectation gap with the marketsell-side generally assumes NAND prices will still rise about 10%, while BofA forecasts a low-single-digit decline. The DRAM side presents a different picture. According to TrendForce, the October contract price for 16Gb DDR5 rose another 5% quarter-on-quarter, with year-on-year gains exceeding 500%; server-side 64GB DDR5 and DDR4 module contract prices rose about 15% quarter-on-quarter in October, with module prices already breaking above US$1,000, reaching US$1,600 and US$1,500 respectively. On this basis, BofA maintains its assumption of DRAM rising 8% QoQ in Q4 2026 and 5% in Q1 2027. Samsung: Optimistic on HBM, but not aggressive BofA held an investor meeting with Samsung Electronics on November 12, with three key takeaways: US AI data center chip demand is strong, with no order cuts seen despite concerns; HBM market position has improved markedly from weakness a year ago; and DRAM long-term agreement (LTA) prices are rising strongly, with high selling prices and high gross margins sustainable over a long cycle. However, management's tone was not aggressive, which is also one of the focuses for investors. Samsung's HBM share target is around 30% to 40%, rather than above 50%; even by end-2027, LPDDR5 profitability will still be better than HBM, so HBM capacity expansion is unlikely to be too aggressive in order to avoid eroding traditional DRAM market share. On the technology roadmap, HBM4e will share the same 1c node and 4nm logic chip as HBM4. BofA also noted that 2027 contract price increases are unlikely to reach TrendForce's expected level, because prices already rose earlier in 2026. It is worth noting that Samsung's guidance for IT NAND is less optimistic than for eSSD, consistent with BofA's price view. Sentiment recovers, valuation remains the main support Memory stocks rebounded this week, with year-to-date gains generally above 100%, and SanDisk and Kioxia posting year-to-date returns exceeding 250%. BofA said investors it spoke with this week generally cited limited downside, citing resilient AIDC chip orders after the US midterm elections, DRAM prices still rising (in contrast to NAND), and low valuation multiples. The valuation table shows SK Hynix at 3.6x 2026 P/E, Samsung at 4.7x, Micron at 10.7x, and Nanya at 5.1x; among NAND names, SanDisk trades at 4.3x 2027 P/E, Western Digital at 13.2x, SIMO at 16.4x, and Phison at 7.7x. BofA believes that relative to AI semiconductor peers, memory sector pricing still appears moderate. BofA concludes that DRAM supply-demand and price trends remain supported by AI data centers and HBM crowding out capacity, while NAND pricing power is shifting toward buyers. The valuation gap and earnings elasticity between the two will depend on whether Q1 2027 contract price negotiations can land as scheduled. This article is reprinted from "Wallstreetcn," author: Xu Chao; GMTEight editor: Yan Wencai.