Next week, the three storage giants will release blockbuster data
This week, as Google parent company Alphabet and Tesla disclosed financial reports, global chip stocks continued to fluctuate. Although both companies stated that they would continue to increase AI capital expenditures, the market response was not favorable. On July 24, local time, Tesla fell more than 2%, and fell nearly 18% this week, the largest weekly decline since 2022. Previously, cloud vendors' increases in capital expenditures usually boosted chip stocks, but now even if these major manufacturers further increase their capital expenditure expectations, the market will still be worried about investment returns and the pressure on cash flow.
This week, as Google parent company Alphabet and Tesla disclosed financial reports, global chip stocks continued to fluctuate. Although both companies stated that they would continue to increase AI capital expenditures, the market response was not favorable. On July 24, local time, Tesla fell more than 2%, and fell nearly 18% this week, the largest weekly decline since 2022. Previously, cloud vendors' increases in capital expenditures usually boosted chip stocks, but now even if these major manufacturers further increase their capital expenditure expectations, the market will still be worried about investment returns and the pressure on cash flow. Next week, the AI industry chain will face a new round of financial reporting tests. SK Hynix, Samsung Electronics and Kioxia will announce their latest results for three consecutive trading days. Whether the three financial reports can prove that AI demand is still being converted into orders for HBM, DRAM and enterprise-grade solid-state drives may affect the trend of chip stocks in the next stage. Three financial reports appeared in succession At 8:00 on July 29, Beijing time, SK Hynix will hold a second-quarter results conference call. The market will focus on HBM3E shipments, HBM4 mass production and long-term order arrangements from major customers. It will also focus on whether the prices of server DRAM and enterprise-class solid-state drives can continue to rise, as well as subsequent capital expenditure plans. At present, investors are not pessimistic about SK Hynix's current profits, and their differences mainly focus on the sustainability of growth. Analysts believe that SK Hynix accounts for approximately 58% of the global HBM market revenue share and occupies a strong position in Nvidia's next-generation AI platform supply chain. At present, HBM supply is still tight, major cloud vendors are still increasing capital expenditures, and new production capacity takes a long time from construction to production. These factors are expected to continue to support product prices and profit margins. However, analysts also remind that SK Hynix’s current performance growth relies more on price and product mix rather than shipments. If the market has fully factored in the expectation of a sharp increase in storage prices, the company's actual performance may be difficult to cross the high threshold; as long-term supply agreements increase and subsequent production capacity is gradually launched, the supply and demand relationship may also change. On July 30, Samsung Electronics will announce detailed results for the second quarter and hold a conference call at 9:00 Beijing time that day. The company had previously estimated that consolidated revenue in the second quarter would be approximately 171 trillion won and operating profit would be approximately 89.4 trillion won, both of which would achieve substantial growth. In Samsung Electronics' upcoming financial report, the source of profits will be clarified, and the company's HBM business progress may also be disclosed simultaneously. It is reported that Samsung is accelerating the certification and mass production of HBM4 and subsequent products. The market hopes to see the company narrow the gap with SK Hynix. It is worth noting that after Samsung released a record performance forecast, its stock price fell 7.4% on July 7, indicating that the market is more concerned about whether growth can be sustained in the second half of the year. On July 31, Kioxia will announce its first quarter results for fiscal year 2027 at 14:30 Beijing time. Compared with the first two companies, Kioxia's financial report better reflects the market sentiment of NAND flash memory and enterprise-class solid-state drives. The company had previously expected operating profit in the first quarter of fiscal year 2027 to be approximately 1.3 trillion yen. Whether the demand for enterprise-class solid-state drives is still strong, whether NAND price increases can continue, and the progress of mass production and customer introduction of new-generation flash memory products will become the main points to watch. From the above three financial reports, what the market wants to verify is how long the current memory chip boom cycle can last, and whether the storage industry can truly get rid of the cyclical nature? Bulls believe that AI-driven storage demand is structural rather than cyclical. As cloud vendors continue to increase capital expenditures, memory chips are transcending cycles. The bears believe that cycles will always be cycles. Some analysts believe that the current pricing power brought about by tight supply may not be maintained in the long term. Excessively high storage prices may also squeeze data center project returns and form a "storage tax." If there is excessive investment in AI computing power construction, cloud vendors' capital expenditures and market sentiment may cool down. Some analysts also believe that although global HBM wafer production capacity will continue to increase, the new capacity will mainly be used to alleviate the existing supply gap. HBM production capacity may remain tight until at least 2027, and oversupply may not become a major risk before 2028. The further popularization of AI agents may also continue to expand the demand for computing power and HBM.
From this point of view, the market will focus on three points next week: how much cloud manufacturers' capital expenditures can be converted into real storage orders, whether HBM, DRAM and NAND price increases can continue, and whether leading manufacturers can maintain supply during the process of expansion. Market analysts believe that if the three companies continue to give strong orders and price guidance, chip stocks may experience short-term adjustments in profit-taking next week, but the long-term trend can be expected; however, if management prompts that price increases slow down, customer inventories increase, or there is pressure on new production capacity, market concerns about AI investment returns may further spread from cloud manufacturers to chip manufacturing.
From this point of view, the market will focus on three points next week: how much cloud manufacturers' capital expenditures can be converted into real storage orders, whether HBM, DRAM and NAND price increases can continue, and whether leading manufacturers can maintain supply during the process of expansion. Market analysts believe that if the three companies continue to give strong orders and price guidance, chip stocks may experience short-term adjustments in profit-taking next week, but the long-term trend can be expected; however, if management prompts that price increases slow down, customer inventories increase, or there is pressure on new production capacity, market concerns about AI investment returns may further spread from cloud manufacturers to chip manufacturing.