BlockBeats News, June 1st - Today, Goldman Sachs released a comprehensive global semiconductor storage industry report, officially announcing a substantial increase in the target prices of SK Hynix, Samsung Electronics, and Kioxia. SK Hynix's target price has been raised to the range of 3.3 to 3.5 million South Korean Won (implying approximately 53% upside), Samsung Electronics' target price has been raised to 480,000 South Korean Won (implying approximately 60% upside), and Kioxia's rating has been upgraded to "Buy" with a 12-month target price set at 93,000 Japanese Yen. The core logic behind this upward revision lies in a historic shift in the storage industry's valuation framework — Goldman Sachs believes that the sustained demand being driven by AI, supply constraints, and the proliferation of Long-Term Agreements (LTAs) are driving the storage industry's transformation from a highly cyclical commodity track to an AI infrastructure track with predictable profitability. The industry benchmark has officially switched from Price-to-Book (P/B) ratio to Price-to-Earnings (P/E) ratio, currently anchored at around 9 times P/E.

The report also significantly raised its supply-demand gap forecast, predicting that the supply shortage in the three major categories of DRAM, NAND, and HBM will persist until 2028. Among them, the shortage of HBM is most severe, with the market size in 2027 being revised up by 54% to $116 billion. Previously, Morgan Stanley and JPMorgan had already pointed out that the widespread implementation of LTAs is transforming the cyclical business of storage giants into a technology infrastructure with a stable cash flow profile. The current forward P/E ratio of only 7.3 times is at a 50%-80% valuation discount compared to TSMC, presenting a historic opportunity for narrowing the discount. However, Goldman Sachs also cautioned that the only solid evidence that can support the new valuation framework lies in the tangible prepaid assets on the balance sheet and legally locked-in deferred revenue obligations. Otherwise, the narrative spanning cycles may still fall into the trap of forward agreements becoming worthless as seen in 2017.