Morgan Stanley’s Shawn Kim Turns Bullish on Memory Stocks: 'Correction Nearing End'; Raises SK Hynix EPS Forecast by 13%

Shawn Kim, an analyst at Morgan Stanley long viewed in the Korean market as the 'poster child for bears,' has just released a new research report on the memory industry, stating that the most intense phase of the current market correction is nearing its end—and that valuations now present an 'attractively tactical entry point.' Kim argues that investor focus for memory stocks is shifting from price cycles toward capital returns. Share buybacks, free cash flow generation, and long-term supply agreements (LTAs) are poised to become the next key catalysts for share prices. Morgan Stanley maintains its target prices for both Samsung Electronics and SK Hynix, while raising its 2026 EPS forecast for SK Hynix by 13% and lowering its 2026 EPS forecast for Samsung Electronics by 10%. Both target prices imply over 60% upside from current share prices. Shawn Kim characterizes this correction as 'a minor ripple within the AI supercycle.' He maintains his long-term bullish stance on both Samsung Electronics and SK Hynix, forecasting 25%–50% earnings growth for both companies in 2027—supported by sustained AI-related capital expenditures and the rapid advancement of agentic AI. Correction Nearing Its End WallStreetCN reported that as early as early July, Morgan Stanley had already issued a timely warning: memory stocks faced near-term pullbacks due to the second derivative of DRAM price increases approaching a peak, compounded by excessive concentration of market positions. Subsequently, the memory sector experienced significant volatility and selling pressure in July, with the Korea Composite Stock Price Index (KOSPI) and memory giants such as Samsung and SK Hynix suffering sharp corrections. This downturn both validated Morgan Stanley’s earlier warning about slowing momentum in price gains and coincided with a chain reaction—including blow-ups among highly leveraged AI-focused hedge funds overseas and margin loan deleveraging among retail investors. Yet Kim believes that, following this recent correction, memory stock valuations have improved markedly. Memory stocks currently trade at approximately 3x forward 12-month P/E—practically no long-term growth premium priced in. The report notes that the peak rate of change in the breadth of earnings estimate revisions has receded from its extreme levels in late June, suggesting the most pessimistic phase may already be behind us. After massive de-risking in July, chasing-money has begun flowing back into the sector. Morgan Stanley expects short-term investor preference to remain concentrated on segments benefiting most directly from AI capex—namely DRAM and niche memory (e.g., DDR4, SLC NAND)—rather than memory module manufacturers. AI-Driven Demand Cycle Unprecedented in Scale; Valuation Multiples Still Have Room to Expand Morgan Stanley emphasizes that AI-driven demand does not contradict traditional memory cycles. During this AI infrastructure build-out cycle, year-on-year DRAM price increases have surged as high as 700%—roughly seven times historical peak levels—and the cycle’s duration has been unusually prolonged.

After Semiconductor Stocks’ Explosive Rally, Concerns Mount: Popular ETF SOXX Surges Over 90%, but Correction Risk Looms

While the broader U.S. equity market and tech stocks overall posted lackluster performance in 2026, the semiconductor ETF SOXX delivered an independent, extraordinary rally—gaining over 90% year-to-date, with most component stocks soaring and turning the fund into a standout market highlight. Operated by BlackRock, SOXX ranks among the largest semiconductor ETFs by assets under management, boasts strong liquidity, and charges low trading fees—making it a top choice for both institutional and retail investors seeking semiconductor exposure. Compared with its leading peer SMH, SOXX exhibits markedly different holdings: it tilts more heavily toward memory chips and is less exposed to NVIDIA—factors that helped it outperform during this rally. However, beneath the explosive gains, risks are mounting. SOXX’s valuation currently sits at historical highs, and industry earnings expectations have been fully priced in. Meanwhile, headwinds are gathering: bottlenecks across the AI supply chain, lackluster performance among major tech firms, tightening U.S. liquidity conditions—and SOXX’s inherently high volatility—all converge to constrain further upside and significantly heighten the risk of a sharp correction.

Sensient Technologies (SXT) Is Up 13.9% After Raising 2026 EPS Guidance And Confirming Dividend

Jul 28, 2026

Sensient Technologies stock surged 13.9% after raising full-year 2026 EPS guidance to $4.10–$4.20 and confirming dividends. The company highlighted growth in natural colors and specialty ingredients despite ongoing supply chain constraints.

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