CITIC Securities: The storage industry remains highly prosperous, with future attention on LTA progress and shareholder returns.

CITIC Securities' research report believes that the recent decline in stock prices of major global storage companies in June and July is not due to weak performance, but rather a concentrated release of market concerns after the pace of price increases peaked. Overall, the Q2 performance of the relevant companies generally meets expectations, with products still in an upward pricing cycle, and the revenue contribution from AI-driven data centers continuing to rise. Looking ahead, although the rate of price increase for storage products is slowing, considering that the storage industry is expected to remain in a state of supply shortage until 2027, this will provide effective support for the gross margins and profitability of companies in the supply chain. Additionally, regarding the market's highest concern, LTA, it can be observed that relevant companies are currently securing large customer demands with 3-5 year term LTAs, and a flexible pricing mechanism along with price floors is also expected to reduce profit volatility and enhance valuations. It is recommended to pay attention to the HDD, DRAM, and NAND sectors.