BofA: Memory Chip Stock Selloff Overdone, Fundamentals Remain Healthy
nashnova research
Bank of America says SK Hynix and Samsung have each dropped over 50% from their June highs, trading at just 2-3x forward P/E versus the 4-7x typical in prior upcycles — calling the market's AI-memory panic overdone.
How far have they fallen, and how cheap are they now?
SK Hynix and Samsung Electronics are both down over 50% from their June highs, a slide spanning roughly three and a half years.
On 2027-2028 earnings estimates, both trade at just 2-3x P/E; in past upcycles the range was 4-7x.
This means → the market has priced in a "the cycle is about to crash" script, but BofA argues the fundamentals do not support it.
Why does BofA say fundamentals are intact?
BofA expects memory chip prices, revenue, and margins to stay strong through 2028.
EPS may dip slightly in 2028 — single-digit percentage — but would still sit near all-time highs.
In plain terms = even the worst-case scenario is a half-step back from the peak, not a collapse. Profits would remain very large.
What recent signals back this up?
Taiwan's Nanya Technology issued a positive Q4 guidance.
PC memory contract prices are rising 15% or more month-on-month, and spot prices remain stable.
BofA also expects SK Hynix to deliver a strong Q4 outlook on October 28 and potentially announce a special cash dividend.
Who is bearish, and what worries them?
After meeting Singapore-based investors this week, BofA found a clear split: hedge funds are broadly short, while most long-only investors remain bullish.
The bears cite three concerns: ① high financing costs at AI cloud companies ② rising Chinese memory supply ③ slowing AI capex growth.
This reflects a classic cyclical fear — the market doesn't doubt demand, it worries about whether the money lasts and whether supply overwhelms.
What is the next catalyst?
SK Hynix's October 28 earnings report is the key checkpoint — strong results and guidance would give BofA's "oversold" call hard data to stand on.
This means → until then, bulls and bears are waiting on the same scorecard, and short-term positioning could intensify.
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