Goldman Sachs Report: Memory Shortage to Last Until 2028, Buy Ratings Maintained

Article by: Tide Research

On June 1, Goldman Sachs released its daily Asia-Pacific equity roundup, "The 720," featuring a long list of names on the cover including Samsung, SK Hynix, Kioxia, MediaTek, Lenovo, and BYD. At first glance, it appears to be a comprehensive buying checklist, but upon closer reading, it reveals a clear central focus: memory chips.

Goldman Sachs' most significant assessment in this report is that the current storage upcycle "will last longer" (higher for longer), with supply shortages persisting through 2028, and the market has vastly underestimated its duration. The evidence is in the valuations: most storage stocks are still trading at mid-single-digit P/E multiples, as if the market views this as just another ordinary cyclical rebound—Goldman Sachs disagrees.

Below, we break it down by importance, followed by a quick-reference table of the underlying assets.

Goldman Sachs compared this cycle to previous ones and concluded that this time is different. The reasons are threefold: greater visibility into AI server demand, limited supply growth, and increasingly rigid long-term supply agreements (fixed volumes and prices). Combined, these factors will make DRAM, NAND, and HBM supply-demand imbalances even tighter in 2027 than in 2026, with shortages extending into 2028.

The most straightforward is Goldman Sachs’ DRAM supply and demand chart. Negative values indicate supply shortages—the deeper the gap, the stronger the price support. Goldman Sachs has now lowered its forecasts for 2026 to 2028 into even deeper shortage territory, with 2027’s projection dropping sharply from -2.5% to -5.9%, nearly doubling. In simple terms: Goldman Sachs believes memory manufacturers will face increasing shortages next year and the year after, meaning price increases are likely to last longer.

When it comes to specific companies, three were collectively targeted:

• Samsung Electronics: Raised 12-month target price to KRW 480,000, Maintain Buy.
• SK Hynix: Raise 12-month target price to KRW 3.5 million, maintain Buy.
• Kioxia: Upgraded from Hold to Buy, new target price of JPY 93,000.

Kioxia is the only company in this round to receive a rating upgrade. Goldman Sachs’ rationale is worth examining separately: it believes the profit peak of this cycle will be higher than previously anticipated and can be sustained for two to three years, rather than experiencing a quick rebound followed by a sharp decline. Based on this, Goldman Sachs has raised its operating profit forecasts for Kioxia from fiscal years 2027 to 2029 by 16% to 48% in a single adjustment, and expects gross margins to remain near the high level of around 80%. For a company in the highly cyclical storage business, such a strong assertion of sustained high profitability over three years is highly significant.

Beyond storage, this episode nearly traces the entire AI hardware supply chain in China and Asia, unified by a central theme: global hyperscalers are accelerating their capital expenditures, and the money flows down this chain.

• MediaTek: Buy, target price NT$5,000. The key catalyst is its transition from mobile chips to data center and custom ASICs (AI chips designed for specific customers). The company aims to generate $2 billion in data center/ASIC revenue by 2026 and capture 10% to 15% of the $70 billion to $80 billion ASIC market by 2027.
• Eoptolink: Buy, target price raised to RMB 841. The company produces optical modules—critical components for high-speed data transmission in AI data centers. Goldman Sachs is bullish on Eoptolink’s 1.6T optical modules, expecting volume growth to accelerate from Q2 and further ramp up in the second half of the year, alongside expanded production in Thailand. The firm has raised its profit forecasts for 2027 and 2028 by 5% and 6%, respectively.
• Biren: Buy, target price raised to HK$70.7. A domestic AI chip manufacturer whose Bili166 has received a Class 1 safety and reliability rating. Goldman Sachs expects it to turn profitable by 2027 as it transitions to higher-performance AI chips and increases pricing, raising its revenue forecasts for 2026 to 2030 by 4% to 28%.
• Huaqin Technology: Buy, a newly covered stock in this report. Target price for its A-shares is RMB 149, and it is being covered for the first time on its H-shares with a target price of HKD 127.76. The rationale is its entry into AI data centers from consumer electronics ODM, with expected revenue CAGR of 32% from 2025 to 2027.
• Data Center Leaders: GDS remains a Buy, but ADR target price lowered to $49 due to slower tenant onboarding and lower monthly service revenue, partially offset by higher valuation of its overseas DayOne business; VNET remains a Buy, target price raised to $16 due to better-than-expected Q1 results, strong capacity ramp-up execution, and removal of downward pressure from strategic investors.
• Lenovo: Buy, target price raised from HK$27 to HK$31. The upgrade is based on the anticipated AI PC replacement cycle. Goldman Sachs expects Lenovo’s notebook market share to expand to 28% by 2028, with AI notebook penetration reaching 66%, driving up overall average selling prices. Its profit forecasts for fiscal years 2027 and 2028 are 22% and 25% higher than Bloomberg consensus estimates, respectively, indicating a significant divergence.

• China Real Estate (China Overseas, China Resources Land): Goldman Sachs is assessing whether this round of rebound in the property sector is sustainable. It assumes an optimistic scenario in which 15 key cities follow Shanghai and Shenzhen’s housing price recovery, leading to a 15% increase in home prices by the end of 2028. Under this assumption, it estimates that China Overseas (COLI) and China Resources Land (CR Land) could see their cash profits expand by more than 30% and 50%, respectively, by 2028. Based on segment valuation, Goldman Sachs identifies additional upside potential of 52% for China Overseas and 76% for China Resources Land, and maintains a positive outlook on these two stronger state-owned developers. Key point: This analysis is based on an optimistic assumption, not a baseline forecast.
• BYD: Buy, target price RMB 137 / HKD 134. The key highlight is its announcement at the intelligent strategy launch that the "Tian Shen Eye B" urban navigation assist (NOA) will be available as a RMB 12,000 optional upgrade across all models, bringing the price of entry-level models equipped with urban NOA down to RMB 78,800—the cheapest urban NOA vehicle in China. Additionally, BYD unveiled its first self-developed 4nm intelligent driving chip, "Xuanji A3," which is already in mass production. Goldman Sachs believes these engineering capabilities will drive higher adoption of advanced driver assistance systems, reduce costs, and improve profit margins.
• Japanese semiconductor equipment: Goldman Sachs maintains buy ratings on Lasertec, Ebara, Disco, and Tokyo Electron. The only downgrade is for vacuum equipment maker Ulvac (6728.T), which is lowered from buy to neutral with a target price of 9,400 JPY, due to weak demand for high-margin power semiconductor orders and slower-than-expected gross margin expansion.
• Panasonic (Panasonic HD): Buy, target price raised from ¥4,000 to ¥4,220, with positive outlook on generative AI-related businesses (backup power, copper-clad laminates/CCL, high-performance capacitors).
• NTT: Buy, target price slightly raised from ¥176 to ¥179, supported by domestic IT service demand and a safety margin provided by approximately 5% total shareholder return.

What connects these individual stocks is Goldman Sachs' macroeconomic assessment: emerging markets are being pulled apart by two forces—one being the AI investment boom, and the other being the supply contraction caused by the blockade of the Strait of Hormuz.

Technology-exporting economies like South Korea and Taiwan benefit from surging exports and current account surpluses, while energy-importing nations face rising inflation, currency depreciation, and fiscal strain from fuel subsidies. Goldman Sachs forecasts a Brent crude oil average price of $90 per barrel in the fourth quarter, continuing to pressure economies heavily reliant on oil imports, and recommends overweighting stocks in China, South Korea, Brazil, and South Africa. This aligns with the recent macroeconomic context of Iran’s situation and oil price movements.

Two other factors that directly impact the liquidity of A-shares:

China's imports surged 23.6% year-over-year in the first four months of this year, but Goldman Sachs believes this is a highly concentrated phenomenon—gold and semiconductors accounted for approximately 65% of the import increase, and does not indicate a sustained deterioration in external balance.

The semi-annual rebalancing of the CSI and CNI indices is estimated by Goldman Sachs to generate over $48 billion in passive fund flows, with the largest inflows going to the technology hardware and semiconductor sectors ($3.1 billion and $1.4 billion respectively), while healthcare and banking see the largest outflows. Newly added constituents expected to receive the highest net passive inflows include Huagong Technology, Yuanjie Technology, Hua Hong Semiconductor, GigaDevice, and Verisilicon. For funds engaging in index rebalancing arbitrage, this is an open secret.

Finally, Goldman Sachs included its usual Easter egg: a prediction of World Cup 2026 winning probabilities—Spain leads at 26%, followed by France at 19%, Argentina at 14%, Brazil at 8%, and England at 5%. The model deducted points from defending champions Argentina—just for fun.

This article is a compilation and interpretation by Shenchao TechFlow of a third-party brokerage research report. The ratings, target prices, profit forecasts, and related judgments cited herein are the views of the brokerage’s analysts and represent the position of their respective institutions; they do not reflect the views of Shenchao TechFlow nor constitute any investment advice.

Please note three points when reading:

I. The target price is an analyst's expectation for a future period (typically 12 months); it is a forecast, not a guarantee, and is subject to repeated adjustments based on company performance and market conditions.

II. Sell-side research reports are inherently bullish. It is common for brokerages to issue "Buy" ratings on the companies they cover, and some of these companies have business relationships with the brokerage, such as investment banking services. A list dominated by "Buy" recommendations should be read with this bias in mind.

Three: The value of a research report lies in its core logic and the underlying assumptions it depends on, not in any single price target. If the core logic holds, the reasoning for related assets holds; if the core logic is disproven, the entire chain of assets weakens. Focus on the logic, not just the price.

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