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Shortages, not weak demand, explain recent moves — top memory and AI hardware stocks stay in favor; pullbacks likely a buying opportunity for leaders like Micron, SanDisk, NVIDIA.

1. Morgan Stanley: NVIDIA Corporation(NVDA.US) Memory Cuts Are About Severe Shortage — The Bull Story Is Intact

Event Recap:

Recent reports confirmed NVIDIA will reduce Vera Rubin rack LPDDR5 memory from 55TB to 28TB and SOCAMM modules from 192GB to 96GB. This triggered a market sell-off as some interpreted it as a sign of AI demand softening, hitting Micron (MU) stock hard on the very day it received NVIDIA's HBM4 certification.

Morgan Stanley’s View (led by analyst Joseph Moore):

• The adjustment is due to intensifying DRAM (and NAND) shortages — NOT a sign of slowing demand.
• The bank has confirmed some shipments do carry lower specs, but the only reason is limited supply, not lack of customer orders.
• NVIDIA and its cloud clients are prepared to buy every available GB of SOCAMM memory; higher configurations will return as soon as supply picks up.

Impact Scale:

If 53,000–70,000 Vera Rubin racks are built next year, fully loaded they would account for up to 5% of global DRAM demand just from this project. Even under the “cut in half” scenario, that still removes ~1.4 million TB, or >2% of the global addressable market, and does so in the highest-dollar segment.

2. SIA Data: Strongest Evidence Yet of Unsolved Supply Shortage

Morgan Stanley highlights from the April SIA (Semiconductor Industry Association) data release:

• Overall semi sales in April fell just 2.2% MoM (vs. typical -10.6%), but YoY growth accelerated to 106.4%.
• DRAM stands out:
  Down just 3.7% MoM (vs. -24% normal seasonality). Up 375.3% YoY. 3-month rolling YoY: +298.5%, both volumes and prices hitting records
• NAND also strong: -4.2% MoM (vs. -11% seasonal), up 366% YoY.
• DRAM prices have risen for 9 consecutive quarters.

Conclusion:

There’s no “quick fix”. HBM wafer production, cleanroom space, and EUV tool bottlenecks, plus minimal new NAND production, will keep memory pricing “higher for longer.”
Long-term supply agreements (LTAs) and hyperscaler pre-buys are symptoms of a shortage, not its cause.

3. Morgan Stanley: Upward Revisions & Stock Implications

• On the back of tight memory supply and price momentum, MS has sharply increased its 2026 global semiconductor revenue forecast from $810bn to $880bn.
• DRAM forecast raised from $150bn to $582bn; NAND from $68bn to $294bn.
• Stock picks: Maintain Overweight on Micron Technology(MU.US) ($1050 target), Overweight on Sandisk(SNDK.US) ($1750 target). Bullish on AI infra leaders NVIDIA Corporation(NVDA.US) ( $288 target), Broadcom Limited(AVGO.US) ($502 target), as well as equipment/supply chain leaders (Lam Research(LRCX.US), KLA(KLAC.US), MKS(MKSI.US)).

4. Broader Market: Signs of Upswing Beyond AI

• April SIA data highlight strong results not just in memory, but across discrete, analog, MCU, and MPU chips — all handily beating Morgan Stanley and historic averages.
• Industrial chip demand is reaccelerating off the cycle’s low; non-AI segments are improving and inventories continue to normalize.
• Pricing power in supply chain mostly reflects cost pass-through, not pricing “recapture” (aside from a few names like ADI).

5. Summary & Investment Strategy

• Main message: This is still a supply-driven bull market for semiconductors, not an AI-bubble that’s popping due to demand issues.
• Leaders across AI and memory (Micron Technology(MU.US), Sandisk(SNDK.US), NVIDIA Corporation(NVDA.US), etc.) are most favored. Corrections are likely to be buying opportunities, especially until supply bottlenecks ease significantly.
• The uptrend is broadening, with strength moving from AI-only toward other semi categories — a sign of improving cycle health.

Disclaimer: The content is provided as general information only and should not be taken as investment advice. All the contents shall not be taken as a recommendation to buy or sell any security or financial instruments. Any action you take resulting from information, analysis, or commentary on this article is your responsibility. Please consult your investment advisor before making any investments.