JPMorgan Sees Memory Chip Shortage Lasting at Least Two More Years — and Broadening from GPUs to CPUs

JPMorgan's latest research paints a stark picture for the memory chip market: the AI-driven supply shortage is far from over. In a series of reports from analysts including Jay Kwon and Mislav Matejka, the bank projects the shortage will persist for at least two more years, broaden well beyond GPUs into CPUs and other components, and drive DRAM prices up more than 400% from the start of 2024 through 2026. New supply, JPMorgan warns, will not arrive in meaningful volume until late 2027 or 2028. The bank identifies SK Hynix, Micron, Kioxia, and Winbond as key beneficiaries, while layering in important caveats around near-term valuation pressure and shifting market narratives.

The Supply Shortage Is Longer and Broader Than Investors Expect

JPMorgan strategist Jay Kwon wrote in an Aug. 10 note that the "S-D shortage continues for the next two years," driven by a higher memory total addressable market from both pricing and volume . The bank emphasizes that shortages are not limited to GPUs but also encompass advanced foundry capacity, high-bandwidth memory (HBM) and other memory components, advanced packaging, and CPUs — an expansion that it believes investors have underestimated . In a separate Aug. 6 note, JPMorgan reiterated that supply will run well short of demand for the next two to three years .

JPMorgan does not see the new supply coming online around 2029–2030 as some might expect. Its latest reports say substantial capacity additions are not expected until late 2027 and into 2028 . The bank has said repeatedly that no meaningful new fab capacity will arrive before 2028 , and that the HBM supply-demand gap is likely to persist through 2028 .

DRAM Prices: More Than 400% Increase from 2024 to 2026

J.P. Morgan Global Research estimates that DRAM prices will have risen more than 400% from the start of 2024 through 2026, driven by AI data center construction and hyperscaler demand absorbing a disproportionate share of global memory capacity .

JPMorgan's Bullish Stock Picks

SK Hynix — JPMorgan maintains a bullish stance, calling recent share price concerns "overblown" and expecting mid-term sentiment to improve . The bank cites SK Hynix's early shareholder return plan (targeting Q3 2026 for disclosure), its strong HBM competitiveness with Nvidia and AMD as GPU makers and cloud service providers offer large upfront payments for 5-year vendor contracts, and projected cumulative free cash flow exceeding 800 trillion KRW over three years as key catalysts . JPMorgan also noted that forced deleveraging from Korean leveraged ETFs is nearly complete, removing a major overhang on the stock .

Key caveat: JPMorgan did cut its SK Hynix target price in early August, saying a "clear stance on capital allocation is imperative to restore stock sentiment" . This suggests some near-term caution on valuation even as the fundamental outlook remains strongly positive.

Micron — JPMorgan sees Micron as a core beneficiary of the memory supercycle, with the stock hitting all-time highs and the bank raising its global memory market forecast to $1.7 trillion by 2028 .

Kioxia — JPMorgan has flagged Kioxia (alongside SK Hynix and Samsung) as part of a historic valuation paradigm shift, noting memory giants now have earnings predictability comparable to Taiwan Semiconductor and trade at a forward P/E of ~7.3x, offering "significant potential for historic valuation repair" .

Winbond — JPMorgan raised Winbond's price target to NT$83 from NT$70, maintaining an Overweight rating. It raised EPS forecasts by ~40% to NT$6.3 for 2026, reflecting a strong DRAM outlook . The bank also upgraded Winbond from Neutral to Outperform earlier, citing a potential fivefold profit increase .

Near-Term Catalysts for SK Hynix (per JPMorgan)

1. Shareholder return plan — SK Hynix targets Q3 2026 to disclose an accelerated plan, including share buybacks and contract price updates .
2. HBM leadership — Maintaining competitive positioning with Nvidia/AMD as GPU makers and CSPs offer large upfront payments for 5-year vendor contracts .
3. End of forced deleveraging — The selloff from Korean leveraged ETF unwind is nearly complete, removing a technical pressure on the stock .
4. Massive free cash flow generation — Cumulative FCF expected to exceed 800 trillion KRW over three years, underpinning returns .

The Bigger Picture: A Structural Shift, Not Just a Cycle

JPMorgan says the current memory upcycle is unlike previous cycles because AI-driven demand is structurally changing the industry. The bank expects the global memory market size to be revised upward continuously from 2026 to 2028, with AI demand driving the industry into an exceptionally prolonged upcycle . Memory spending is surpassing 50% of cloud providers' capital expenditures, pushing the sector from a cyclical commodity to a core asset of AI infrastructure .

At the same time, JPMorgan acknowledges a risk to the prevailing market narrative that "AI-driven memory demand is price-inelastic and this time is different." Recent moves by Nvidia and AMD to lower memory content in future AI products have weakened that narrative, even though the underlying supply-demand fundamentals remain solid .