Why is Bernstein bullish on memory stocks after Samsung, Nvidia deals?

Investing.com -- Bernstein has reiterated its bullish stance on memory chipmakers following a wave of multibillion-dollar partnerships announced at an AI Summit hosted by the South Korean government in San Francisco on Friday, where Samsung, SK Hynix, Nvidia and Broadcom unveiled new agreements spanning memory, foundry and AI data centers.

SK Hynix and Nvidia signed letters of intent detailing a partnership worth more than $500 billion, covering memory supply and a 2GW Vera Rubin DSX AI Factory planned to come online for SK Telecom in 2027.

Bernstein analysts, led by Mark Li, noted the memory partnership includes "long-term technical developments & stable supply of next-gen AI memory" intended to help SK Hynix "expand the foundation for growth."

SK Group is also reported to be pursuing an additional $250 billion in memory supply collaborations with other global tech companies over the next five years.

Separately, Samsung and Broadcom signed a memorandum of understanding covering $200 billion of memory, including high-bandwidth memory (HBM), and foundry services through 2030. The foundry component will focus on 2-nanometer and below process technology, along with advanced packaging techniques the analysts compared to TSMC’s Chip-on-Wafer-on-Substrate (CoWoS) offerings.

Analysts said the announcements reinforce memory’s growing importance to AI infrastructure. “We believe the announced amounts are more for memory and indicate the need for NVIDIA & Broadcom to secure memory supply,” they wrote.

For context, though they “can’t precisely quantify the impact of the announcements,” the analysts noted consensus expectations of roughly $1.3 trillion in annual memory revenue in both 2027 and 2028.

They also said any impact on TSMC "should be negligible," since it remains unclear whether Broadcom will actually produce AI ASICs at Samsung, and given the existing queue of demand for TSMC’s capacity.

Overall, Bernstein said it remains constructive on memory and views the sector’s recent pullback as "a good entry point," arguing memory is more important to AI than logic semiconductors. The broker flagged a longer-term competitive threat from China in NAND, resulting in an Underperform rating on Kioxia, but said that risk is far smaller in DRAM, where China will likely struggle to compete without access to EUV lithography.

Bernstein rates Samsung, SK hynix and Micron Outperform.

The new partnerships could also help ease supply concerns for Nvidia and Broadcom, both of which have guided toward substantial AI-related growth, the analysts said.

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