① Global new data center capacity is expected to grow by approximately 41% next year, increasing from 22.3 GW this year to 31.5 GW next year;
② The combined net cash flow of nine semiconductor companies will grow from US$282 billion in the second quarter of this year to approximately US$2 trillion by the end of 2028.
Recently, as market concerns about the prospects of AI have intensified, global AI‑related tech stocks have experienced significant volatility, particularly among South Korean memory‑chip giants.$Samsung Electronics (005930.KR)$and$SK hynix (SKHY.US)$The stock price experienced significant volatility at one point.
In response, the international investment bank Nomura Securities stated that market concerns about the outlook for AI investments constitute an "overreaction," that the shortage of memory chips will persist through 2028, and that valuations in the memory sector are severely undervalued.
The market is overly concerned about the storage sector.
In recent weeks, global memory‑chip stocks have endured a turbulent period: as concerns mount over whether the AI investment boom can sustain itself, the share prices of major memory‑chip manufacturers have all retreated from their earlier peaks.$PHLX Semiconductor Index (.SOX.US)$It even once posted the longest consecutive losing streak since the 2008 global financial crisis.
However, Nomura believes that semiconductor memory stocks have already retraced roughly 37% from their recent peaks, driving the average forward price-to-earnings ratio for memory stocks in 2027 down to around 3 times, indicating that valuations are now severely undervalued.
The factors weighing on the market are multifaceted: slowing growth among AI companies, financial strain among data center operators, and mounting competitive pressures—all combining to dampen investor sentiment. Among these, AI cloud service providers…$CoreWeave (CRWV.US)$Bond prices have recently plunged, intensifying market concerns about a contraction in AI companies' capital expenditures (CAPEX).
However, Nomura believes that the market has, in fact, overreacted to the impact of the aforementioned risks on the medium- to long-term supply-and-demand dynamics of memory chips.
Nomura also emphasized in its report that it is maintaining its stance on South Korea.$Samsung Electronics (005930.KR)$and$SK Hynix (000660.KR)$It assigned a "Buy" rating and set target prices of KRW 670,000 and KRW 4.7 million for the two companies, respectively—implying roughly double the upside from their recent share prices—and designated both firms as "Key Stocks to Watch."
Storage demand is still expected to outpace supply.
Nomura's core supporting argument stems from the trend of data center expansion: according to Nomura's tracking, global new data center capacity is expected to grow by approximately 41% next year, rising from this year's 22.3 gigawatts to 31.5 gigawatts. Against the backdrop of such sustained large-scale capital expenditure, demand for storage chips is still likely to outpace supply, helping to keep prices firm.
Nomura believes that global AI companies as a whole continue to post rapid growth. The firm estimates that OpenAI and Anthropic together saw their combined third-quarter revenue surge by roughly 507% year over year; however, Nomura also cautions that achieving the market's full-year revenue forecast will require a strong rebound in the fourth quarter.
Nomura also believes that the funding challenges facing data center operators are unlikely to escalate into a full-blown halt in AI investment.
"While risks at individual companies may rise, existing data centers and equipment can be taken over and operated by other entities," Nomura wrote in its report, arguing that a financial crisis at a single operator does not necessarily mean the overall investment in infrastructure will evaporate.
Other institutions' research corroborates Nomura's assessment.
In fact, the forecasts of other market research firms also align with Nomura's assessment. Earlier this month, TrendForce released a report stating that the combined capital expenditures of the world's nine leading cloud service providers (CSPs) will reach US$957 billion this year, up 106% year over year, and are expected to grow another 60% next year, surpassing US$1.5 trillion. The projections for both 2026 and 2027 have been revised upward from previous estimates.
The aforementioned survey covers$Alphabet-A (GOOGL.US)$、$Amazon (AMZN.US)$、$Meta Platforms (META.US)$、$Microsoft (MSFT.US)$、$Oracle (ORCL.US)$, as well as China's ByteDance,$TENCENT (00700.HK)$、$Alibaba (BABA.US)$、$Baidu (BIDU.US)$。
TrendForce reports that rising server system prices, component shortages driving price increases, and companies' advance payments to secure supplies will collectively boost capital expenditures.
The firm also noted that some component suppliers require upfront payments, accelerating the cash‑outflow cycle for cloud service providers. AI server shipments are expected to grow 32.2% this year, with next year's growth rate approaching 36%.
Nomura also expects the financial performance of storage vendors to improve significantly going forward. According to its estimates, including…$Samsung Electronics (005930.KR)$、$SK hynix (SKHY.US)$The combined net cash flow of nine semiconductor companies, including those mentioned, is projected to grow from $282 billion in the second quarter of this year to approximately $2 trillion by the end of 2028. The analysis notes that the benefits stemming from the expansion of AI infrastructure will be reflected primarily in improved cash flows for chipmakers, rather than for data center operators.
Edited by melody