Summary: GS: NVDA not fully valued on inference/customer expansion; AVGO/NVDA rises not a bubble; neutral on AMD, ARM, MRVL as AI share still limited.

Goldman Sachs: Although the AI investment cycle is shifting from "investment" to "returns," this does not mean that a "slowdown" equates to "peaking."

Goldman Sachs pointed out in its latest AI report that despite a moderating growth rate, AI infrastructure investment will remain sustainable for the next 2-3 years. The market's excessive focus on "slow returns" may overlook the fact that cost-saving benefits have already begun to be realized, and stock prices have yet to reflect this structural change.

The report emphasizes that while the commercial monetization of AI is still in its early stages, the first phase of returns, driven by cost reduction, is already evident. It is estimated that by 2030, AI automation could save Fortune 500 companies approximately $935 billion in costs. Analysts believe this early gain is sufficient to support the current level of AI infrastructure investment, even though the growth rate may slow.

Analysts also noted that hyperscalers, as the primary investors in AI infrastructure, base their investment decisions more on long-term revenue growth opportunities rather than short-term cost savings.

The AI Investment Return Debate: Cost Savings vs. Commercial Monetization

Since the generative AI boom began in late 2023, cumulative capital expenditures have surpassed $350 billion. Is the investment worthwhile? Are the returns sustainable? These questions are becoming the focal point of the market.

The Goldman Sachs research team divides AI value creation into three stages: the first stage achieves cost reduction through automation (currently underway), the second stage involves reinvestment and rebuilding, and the third stage realizes monetization through incremental revenue.

The report's analysis shows that AI applications in functions such as customer service, sales and marketing, and IT are already generating tangible benefits. In customer service, for example, 43% of call centers have adopted AI tools, reducing average operating costs by 30%.

Specifically, JPMorgan Chase plans to cut 10% of its back-office staff over the next five years, AT&T has reduced call center traffic by 30% with the help of AI, and T-Mobile expects to cut customer service interactions by 75% by 2027.

The core of the current debate is the sustainability of AI infrastructure investment. Goldman Sachs projects that by 2030, the world's Fortune 500 companies could save up to $935 billion in costs, representing about 14% of their total costs. The net present value (NPV) of AI investment returns is estimated at approximately $780 billion, which still shows a positive return relative to the cumulative investment of $350 billion.

Analysts point out that hyperscalers, the main investors in AI infrastructure, make investment decisions based more on long-term revenue growth opportunities than on short-term cost savings. This time lag between investment and returns complicates ROI calculations.

Infrastructure Spending Secure in the Short Term, Inference Demand Becomes New Driver

Another key concern for the market regarding AI stocks is whether infrastructure spending has already peaked, especially with rising expectations of inventory buildup and weakening demand for training chips.

Goldman Sachs believes these concerns are premature, stating in the report:

- For the next 2-3 years, especially until 2026, major tech companies (like Microsoft, Amazon, Google, Meta) have the financial capacity to continue investing in AI infrastructure without significantly compressing their profit margins.

- Key suppliers such as TSMC, Broadcom, and SK Hynix continue to raise their AI-related revenue forecasts. TSMC has been increasing its near-term and long-term AI revenue targets for six consecutive quarters, and SK Hynix expects its HBM revenue to double in 2025. These figures support the judgment of a fundamental balance between supply and demand.

- Demand for "inference" computing power from enterprise customers and governments (sovereign AI) will become a new driver of spending, especially as small and medium-sized enterprises rapidly expand their deployment of custom models or edge AI applications.

Taking NVIDIA as an example, Goldman Sachs responded by conducting an in-depth analysis of the supply-demand balance for the GB200 NVL72 rack.

Based on NVIDIA's public statements, hyperscalers are currently deploying about 1,000 GB200 racks per week and plan to further accelerate deployment in the second quarter. The Goldman Sachs model shows that to avoid excess inventory at ODM manufacturers, hyperscalers will need to deploy 36,000 and 58,000 GB200-equivalent racks in 2025 and 2026, respectively.

The report notes that the rollout of NVIDIA's Blackwell architecture is on track, with the product already accounting for 70% of data center revenue in the first quarter, largely completing the transition from Hopper to Blackwell. This progress helps alleviate market concerns about inventory buildup.

However, analysts also caution that the visibility of hyperscalers' capital expenditures for 2027 remains limited, which is a key uncertainty affecting the long-term supply-demand balance. In contrast, NVIDIA and Broadcom have better business visibility due to their longer product delivery cycles (about 12 months) and relatively concentrated customer bases.

How Are Stock Prices Pricing in AI Expectations?
Using NVIDIA as an example, Goldman Sachs points out that the market has partially priced in the strong demand expectations for its next-generation GPU (Blackwell) but has not fully valued the expansion of its customer base and the explosive growth of its AI inference business.

For Broadcom, the rise in its stock price is more based on the clear guidance provided by the company—that AI revenue will grow by 60% year-over-year in FY25 and FY26. This expectation also leads Goldman Sachs to believe that the rise in Broadcom's and NVIDIA's stock prices is not a "bubble" but rather a reflection of a clearer path to medium-term fundamental improvement.

In contrast, Goldman Sachs maintains a neutral rating on companies like AMD, Arm, and Marvell because their AI-related businesses are still in the early stages with limited market share.


the rise in Broadcom's and NVIDIA's stock prices is not a 'bubble' but rather a reflection of a clearer path to medium-term fundamental improvement

structural marker; pre-classified as canonical yfinance ticker


Goldman Sachs maintains a neutral rating on companies like AMD, Arm, and Marvell because their AI-related businesses are still in the early stages with limited market share


KeyBanc analyst John Vinh, while issuing a cautionary note, still raised Nvidia's price target from $190 to $215 and maintained an 'Overweight' rating. Susquehanna analyst Christopher Rolland also saw continued momentum in Nvidia's data center business, raising his price target from $180 to $210 while maintaining a 'Positive' rating.

Summary: Shares/endorses KeyBanc and Susquehanna Buy/Overweight/Positive calls on NVDA with raised PTs of $215 and $210 respectively.

The highly anticipated Nvidia earnings report: Will the Q3 guidance fall short of expectations?

Nvidia will release its latest earnings report next Wednesday, and the Q3 guidance will be the main focus of the market.

According to the latest report from KeyBanc Capital Markets, Nvidia may temporarily exclude direct revenue from the Chinese market in its guidance for the next quarter, since under U.S. export restrictions, the approval timing for semiconductor export licenses remains uncertain.

KeyBanc analysts said that if the China business based on chips such as the H20 and RTX6000D (B40) were included, it could have brought Nvidia an incremental revenue of $2–3 billion.

Currently, the market consensus expects Nvidia’s Q3 revenue to be $45.92 billion, with earnings per share of $1.01.

Capacity Expansion Supports Fundamentals
Despite short-term uncertainty in the Chinese market, Nvidia’s business fundamentals remain strong, providing solid support for its long-term growth.

KeyBanc emphasized in its report that Nvidia’s GPU supply and production capacity are improving significantly, which is the core driver of its continued performance momentum.

Data shows that in the quarter ending in July, Nvidia’s GPU supply increased by 40%, and with the ramp-up of the B200, supply in the quarter ending in October is expected to grow another 20%. Meanwhile, the newer and more powerful B300 chips will begin shipping in the October quarter and are expected to account for half of the Blackwell series shipments.

In addition, server rack production efficiency is also improving.

The report noted that the manufacturing yield of GB200 racks by server ODMs has approached 85%, and rack shipments by the end of the year are expected to reach 15,000 to 17,000 units. Therefore, the bank raised its full-year GB200 rack shipment forecast from 25,000 to 30,000 units.

Wall Street Maintains Optimistic Outlook
KeyBanc analyst John Vinh, while issuing a cautionary note, still raised Nvidia’s price target from $190 to $215 and maintained an “Overweight” rating.

Susquehanna analyst Christopher Rolland also saw continued momentum in Nvidia’s data center business, raising his price target from $180 to $210 while maintaining a “Positive” rating.

Despite the two Wall Street institutions raising their price targets, market reaction remained relatively cautious. On Wednesday morning, Nvidia’s stock price still fell by about 2.5%.

$NVDA


Summary: Bullish global memory sector; base-case double-digit upside, bull-case 40%+; Samsung and Hynix at conservative 1.0–1.2x P/B favor upside over downside risk.

Global Memory Risk-Reward

    • Distribution of returns under bullish/bearish scenarios for the memory sector
    • Even under the base-case scenario, double-digit upside potential is evident, while in the bull case, more than 40% additional returns are possible
    • Conversely, in the bear case, downside risk is around 20%, but compared with the past, the risk-reward ratio remains favorable
    • For Samsung Electronics and SK Hynix, valuations remain conservative (around 1.0–1.2x P/B), implying greater upside potential relative to risk


Even under the base-case scenario, double-digit upside potential is evident, while in the bull case, more than 40% additional returns are possible

Memory sector basket: Micron, SK Hynix, Samsung


Summary: Citi reiterates bullish stance on KLAC and adds AMAT to key recommendations on memory recovery, reduced China risk, and attractive valuation.

industry='Semiconductor Equipment & Materials'

Equipment Capex Outlook: 2025 WFE Spending Flat, Memory Recovery & AI Cloud Capex Drive Optimistic Revisions

Citi (A. Malik, 25/07/15)

Citi states that global Wafer Fab Equipment (WFE) spending for 2025 is expected to remain at the $100 billion level, largely flat compared to last year. Among this, the three major manufacturers—TSMC, Samsung, and Intel—will account for approximately 60%. Driven by improvements in memory (especially NAND) and an increase in AI cloud capital expenditure, Citi has revised its 2025/2026 WFE outlook upwards and maintains a positive view on equipment stocks.

TSMC Maintains $40 Billion Capex Estimate, Still Potential for Upward Revision in September

TSMC is scheduled to release its financial report on July 17. In its April conference call, the company provided a 2025 capital expenditure range of $38 billion to $42 billion, with 70% allocated to advanced processes, 10-20% to specialty processes, and another 10-20% for advanced packaging, testing, and mask manufacturing. Citi anticipates that TSMC may still raise its Capex in September, thus maintaining a $40 billion assumption in its WFE model, slightly below the market consensus of $43 billion.

Intel Continues to Cut Capital Expenditures, Citi's Estimate Significantly Below Market Consensus

Intel will release its financial report on July 24. In its April conference call, the company lowered its 2025 capital expenditure guidance to $18 billion, reflecting improved utilization of construction assets and enhanced operational efficiency. Citi believes there is still room for further reduction, thus assuming only $14 billion in spending for 2025 in its model, significantly lower than the market consensus of $19 billion.

Samsung Capital Expenditure Expected to Decline 10% Year-on-Year, Below Market Expectations

Samsung will release its financial report on July 30. Earlier this year, management stated that 2025 memory investments would be flat compared to 2024. Citi's model estimates Samsung's 2025 capital expenditure at $31 billion, a 10% year-on-year decrease, while market expectations are $38 billion (a 2% year-on-year increase when measured in Korean Won).

Citi Remains Bullish on KLAC and AMAT, Memory Cycle Recovery and Reduced China Risk as Catalysts

Citi notes that KLAC has a higher proportion of advanced process exposure, benefiting from increased spending by leading foundries. The firm has also added AMAT to its list of key U.S. recommendations due to a lower base in the second half of the year, a recovery in DRAM, reduced China business risk, and relatively attractive valuation.


added AMAT to its list of key U.S. recommendations due to a lower base in the second half of the year, a recovery in DRAM, reduced China business risk, and relatively attractive valuation


Summary: Goldman post-D/G: limited near-term upside for Hynix, low expectations for Samsung HBM; some rotation toward NVDA/TSMC as cleaner AI plays.

250825_South Korea Technology: Investor feedback post our Hynix D/G; HBM pricing the main pushback, while Hynix vs. Samsung now a debate - Goldman Sachs

[Key Takeaways]

1. The biggest difference between investors and our view was on SKH’s ’26 HBM blended ASP.

2. Unlike in the past, there is no longer an overwhelming preference for SKH over SEC; instead, the two are now being compared side by side.

3. However, the attention lost from SKH has not fully shifted to SEC, with some investors instead turning their eyes to TSMC/NVIDIA as alternatives.

[Contents]

1. After our downgrade report on SKH, we held more than 150 investor meetings in the U.S. and Asia over several weeks.

2. This report summarizes the feedback we received in the process.

3. The area where investors most pushed back on our view was that SKH’s ’26 HBM blended ASP would remain positive, contrary to our stance.

4. In other words, most investors expect SKH’s earnings growth to be strong next year.

5. This is based on: 1) low confidence that SEC’s HBM3E 12hi and HBM4 will be supplied on time, and 2) a positive outlook on the legacy market.

6. Compared with several months ago, investors still showed a preference for SKH over SEC, but instead of a clear dominance, the debate has shifted to which of the two to choose.

7. A majority of investors believe SKH’s HBM pricing could remain flat or even rise slightly.

8. This is a stark contrast to our projection of a double-digit decline.

9. Most investors agreed that HBM3E 12hi pricing would decline next year due to new competitors entering the market.

10. However, they saw the decline as only about -10%, not the -30% level we modeled.

11. Few investors believed that SEC/MU would supply HBM4 to NVIDIA in a meaningful volume next year.

12. As a result, investors held a positive view that strong pricing momentum in HBM4 would support SKH’s HBM ASP.

13. At the same time, there was awareness across investors that costs would rise significantly in the transition from HBM3E to HBM4

* due to increased I/O counts, lower yields, outsourcing costs for base die, etc.

14. However, they believed the price premium would offset those costs, taking a much more optimistic stance than our scenario of HBM OPM falling more than -10ppt.

15. In short, only a minority of investors agreed with our base scenario that SKH’s operating profit would decline YoY next year.

16. As for SEC, investor perception of its HBM qualification progress improved compared with 1–2 quarters ago, but confidence still remained low.

17. Many investors now see HBM3E 12hi as less important, with the key factor being the timing of HBM4 qualification.

18. Overall, SEC was evaluated slightly more favorably than 1–2 quarters ago, but expectations remain low.

19. Lastly, with memory spot prices continuing to show strength and major players delivering better-than-expected fundamentals, investors were positive on legacy semiconductors for 2H25.

20. While most investors still preferred SKH, the preference was no longer overwhelming, and the discussion has now shifted to a debate with SEC.

21. Some investors saw valuation attractiveness in SKH due to the recent share price correction, but we believe near-term upside catalysts remain limited.

22. Regarding SEC, the number of questions in this round of meetings rose significantly, but the interest lost from SKH did not flow directly into SEC.

23. Instead, some investors looked toward cleaner AI beneficiaries such as NVIDIA and TSMC.


overall, SEC was evaluated slightly more favorably than 1–2 quarters ago, but expectations remain low


some investors looked toward cleaner AI beneficiaries such as NVIDIA and TSMC


DS operating profit in Q4 could exceed 6 trillion KRW, more than double last year's Q4 figure of 2.9 trillion KRW

Summary: Samsung DRAM up 30%/NAND up 10% in Q4; supply tightening drives memory price cycle recovery benefiting Samsung and Micron.

[Exclusive] Samsung Electronics Raises DRAM Prices by Up to 30%… NAND Up 10%

Samsung Electronics has implemented contract price hikes for DRAM and NAND flash in the fourth quarter. With global competitors also moving to adjust prices, the tightening supply situation—driven by the reduction of legacy product production and the expansion of demand from major cloud providers—has been cited as the main background.

According to industry sources on the 22nd, Samsung recently notified major customers that it will increase contract prices for key DRAM and NAND flash-based products in the fourth quarter. Specifically, DRAM products such as Low Power Double Data Rate (LPDDR) 4X, 5, and 5X will rise by 15–30%, while NAND-based mobile storage such as embedded MultiMediaCard (eMMC) and Universal Flash Storage (UFS) will rise by 5–10%.

This move aligns with recent price hikes by global memory manufacturers including Micron and SanDisk. Earlier this month, SanDisk informed customers it would raise NAND flash product prices by 10%, while Micron announced it would increase major product prices by 20–30% and temporarily suspend new quotations.

An industry official commented, “With fourth-quarter demand from smartphones and AI PCs coinciding, and legacy product production continuing to decline, price increases became inevitable. Samsung’s decision reflects this supply-demand environment.”

Both supply and demand factors appear to be driving the global memory manufacturers’ price adjustments. The fourth quarter is traditionally a peak season for new smartphone and PC launches. This year in particular, the arrival of flagship smartphones and AI PCs equipped with artificial intelligence features has boosted demand for low-power, high-performance memory.

Additionally, as production of legacy products decreases, the justification for price hikes has grown. Global memory firms are gradually reducing output of older DRAM products such as DDR4 and LPDDR4X, and shifting focus to next-generation DDR5 and HBM. In this environment, rising demand has pushed prices higher. In fact, in July, the monthly average price of DDR4 spiked by 50% in just one month, even surpassing DDR5 prices—an unprecedented phenomenon.

Originally, Samsung had planned to end production of DDR4 and LPDDR4 by June this year, but unexpected demand extended the timeline first to the end of the year, and more recently by another year to late next year. It was also reported that Samsung raised prices slightly for LPDDR5X and other products in the third quarter compared to the previous quarter.

The NAND flash situation is similar. Recently, large cloud service providers have placed massive orders for server solid-state drives (SSDs) to expand data centers, exacerbating supply shortages. Traditionally, data centers have relied heavily on hard disk drives (HDDs), but the explosive increase in storage capacity required for AI training and inference has driven NAND flash demand to surge at an unprecedented pace.

Ultimately, tight supply across both DRAM and NAND, coupled with rising demand, has strengthened the rationale for price hikes. Citigroup has forecast DRAM and NAND supply in 2025 to fall short of demand by 1.8% and 4%, respectively. Global investment bank Morgan Stanley has also predicted NAND supply could fall up to 8% short of demand next year.

Industry observers expect the price increases to directly improve Samsung’s semiconductor division (DS—Device Solutions) profitability in the fourth quarter. As of Q2 this year, Samsung held 32.7% of the global DRAM market and 32.9% of the NAND flash market, ranking second and first, respectively. In particular, Samsung has technological leadership in LPDDR, having developed the world’s first LPDDR5 in 2018 and LPDDR5X in 2021.

Given that revenue contributions from Nvidia-related HBM remain limited for now, the latest price hikes are seen as critical for defending near-term earnings. Some predict DS operating profit in Q4 could exceed 6 trillion KRW, more than double last year’s Q4 figure of 2.9 trillion KRW.

An industry official added, “Samsung still holds leadership in mobile memory and UFS/eMMC. This round of price hikes, in line with global competitors’ moves, will bolster the rebound of semiconductor profitability in the short term.”

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https://t.co/wQXgcvstH7


This move aligns with recent price hikes by global memory manufacturers including Micron and SanDisk


Goldman Sachs expects Micron's stock price to rise in the short term, as its earnings and guidance significantly exceeded market expectations

Summary: Shares Goldman view: MU stock to rise short-term on blowout earnings/guidance; SNDK seen benefiting from same catalyst.

Goldman Sachs First Take

12M TP: $130 (maintained)

Goldman Sachs expects Micron’s stock price to rise in the short term, as its earnings and guidance significantly exceeded market expectations. However, despite this strong earnings release, the official investment rating on Micron remains Neutral.

Investors are expected to focus on the following three key points from Micron’s conference call:

1. HBM roadmap progress: Whether Micron can successfully ramp up HBM production and achieve its market share target by the end of 2025.

2. Sustainability of DRAM pricing: Whether the current strong upward momentum in DRAM prices can continue going forward.

3. Profitability maintenance: Whether Micron can defend high gross margins in a stable manner during the transition of production mix toward advanced products such as HBM4.

• Micron’s strong earnings are also expected to trigger a positive initial reaction in the stock price of SanDisk (SNDK), which is exposed to similar end markets.


Micron's strong earnings are also expected to trigger a positive initial reaction in the stock price of SanDisk (SNDK)


Summary: 2026 SOCAMM orders shift to SK Hynix (11B Gb) and Samsung (10B Gb) at Micron's expense; SK Hynix leads, Samsung expanding; Micron growth limited.

[2026 SOCAMM: Supplier Composition Centered on SK hynix and Samsung Electronics]

Since last year, NVIDIA has continued to use Micron as the supplier of LPDDR for its Grace CPU (Figure 1). This year’s SOCAMM orders have also been placed almost exclusively with Micron. However, recently, NVIDIA has been restructuring its allocation for next year to focus mainly on domestic suppliers. While Samsung Electronics and SK hynix received only minimal volumes this year, they have each been allocated explosive volumes of 10 billion Gb and 11 billion Gb, respectively, for next year. Meanwhile, Micron, which received 5 billion Gb orders this year, is expected to see only limited growth to 7 billion Gb next year.

This move is interpreted as NVIDIA’s intention to utilize all three suppliers for SOCAMM. Unlike HBM, product competitiveness differences between suppliers are not significant for SOCAMM. From the supplier’s perspective, technological capability translates into cost differences rather than performance, making the adoption of the 1c nm node the most important factor. SK hynix, which received the largest volume allocation by a narrow margin, will need to make additional 1c nm investments next year. Samsung Electronics, meanwhile, plans to allocate its entire 1c nm capacity to HBM, but is highly likely to gradually expand its application to SOCAMM and other products.


Samsung Electronics, meanwhile, plans to allocate its entire 1c nm capacity to HBM, but is highly likely to gradually expand its application to SOCAMM and other products


Micron, which received 5 billion Gb orders this year, is expected to see only limited growth to 7 billion Gb next year


Summary: Shares HSBC note raising NVDA PT from $125 to $200 on FY27 EPS $6.43; rating maintained at Hold with supply chain and China headwinds.

NVIDIA 2Q Earnings Preview: China and Supply Chain Uncertainties Persist, GPU TAM Expansion Supports Long-Term Potential
HSBC (F. Lee, 25/08/20)

2Q/3QFY26 Outlook

HSBC forecasts 2QFY26 revenue of $46.7 billion, slightly above management guidance of $45.0 billion and in line with consensus of $46.3 billion; 3QFY26 revenue of $53.9 billion, also in line with consensus of $53.3 billion. Gross margin is expected to recover to 72% (2Q) and 73% (3Q), with EPS of $1.03 and $1.21, respectively, both consistent with market expectations. Overall performance is solid, but China market uncertainty remains the main constraint.

China Market Uncertainty

Although H20 export licenses have resumed, HSBC believes risks remain in China’s AI GPU market:

1. The U.S. side requires a 15% revenue share, depressing ASPs;

2. Chinese regulators are discouraging domestic companies from purchasing U.S. products;

3. NVIDIA itself may launch the B30 GPU as an H20 replacement.

HSBC expects no H20 shipments in 3QFY26, recovery of 390,000 units in 4Q generating $3.3 billion revenue, and full-year revenue of $7.9 billion, below the previous estimate of $10 billion, and far below the potential $15 billion level absent restrictions.

Supply Chain Bottlenecks and NVL Cabinet Shipments

HSBC expects FY26 NVL cabinet shipments of about 26,000 units. Even if yields improve to 60–70%, this remains below NVIDIA’s target of 50,000 units and HSBC’s prior forecast of 40,000 units. GPU shipments are expected to reach 6.8 million units (equivalent to 284,000 CoWoS wafers). Supply chain bottlenecks imply some shipments will be deferred into FY27. If Rubin platform mass production is delayed, uncertainty will be further exacerbated.

GPU TAM and FY27 Growth Drivers

Driven by revised CSP capital expenditure, GPU TAM continues to expand. HSBC raises its FY27 data center revenue forecast to $253 billion (consensus: $240 billion), and under a bull case assumes CSP Capex of $545 billion (vs current $446 billion), corresponding to data center revenue of $310 billion and EPS of $7.74. Under the base case, FY27 EPS is estimated at $6.43, higher than the consensus of $5.94.

Valuation and Rating

HSBC raises its price target from $125 to $200, based on FY27 EPS of $6.43 and applying a 31x target PE (a 0.5 standard deviation discount to the past five-year average). The rating is maintained at Hold, with short-term supply chain and China market uncertainties still seen as headwinds. Only further upward revisions of CSP Capex in 2026 could drive higher re-rating.

Risk Factors

Upside risks: AI GPU and NVL cabinet shipments exceeding expectations, ASPs higher than expected, stronger-than-expected China H20 demand.

Downside risks: High-end GPU product mix below expectations, CSP investment in generative AI weakening, overall data center demand softening, geopolitical uncertainties.

$NVDA


Even if this may look like a bad deal for Intel in the short term, in the long run it's actually a very good deal.

Summary: Bullish INTC long-term: US gov equity stake acts as co-signer, Trump becomes Intel's salesman, accelerates process dev and could pressure NVDA/Apple/Qualcomm to use Intel Foundry.

Even if this may look like a bad deal for Intel in the short term, in the long run it’s actually a very good deal.

It’s essentially the U.S. government co-signing Intel’s guarantees. And it also means Trump himself is effectively becoming Intel’s salesman.

With this capital injection, Intel can accelerate process development, and we can even consider a scenario where the U.S. government pressures big fabless companies like NVIDIA, Apple, and Qualcomm to give orders to Intel Foundry.

Why is this deal being viewed so negatively in the first place? I honestly don’t understand.

$INTC

@Jukanlosreve perhaps you could step through your logic for me. I'd love to know how coercing Intel to convert CHIPs Act funding etc into a 10% equity stake helps to save Intel? Even Mr. Lutnick clearly stated that this is a worse deal for Intel compared to before. Why would he say that?


Summary: Bullish Meta on Zuckerberg's agility in AI/social competition vs OpenAI.

industry='Internet Content & Information'

@RonnieBateman5 You’re right. There have already been multiple media reports that OpenAI is considering building a social media platform like X.

I’m not sure how bureaucratic Meta has become, but I think Zuckerberg is moving with impressive agility.

@Jukanlosreve I was listening to bg2 podcast the other day. Hosts were saying the economic value of AI will accrue at the consumer layer. Whom owns the consumers shall win the war. Meta has a shot here to create another few trillion in market cap. If Meta had failed in SI, they will be in


Summary: Citi reiterates Buy on SK Hynix despite PT cut to ₩380K from ₩430K on 2026 HBM ASP/oversupply risk; author shares/adopts the call.

Peter Lee, a guru and top analyst in the IT industry from Citi, released a note today regarding SK Hynix:

Q2 Review: Operating Profit Meets Market Expectations; 2026 HBM ASP Growth Potentially Slowing Due to Intensifying Competition

SK Hynix announced Q2 operating profit of KRW 9.2 trillion, aligning with the market consensus of KRW 9.0 trillion. The company recorded solid performance with strong increases in DRAM and NAND bit shipments, up +mid-20% and +70% QoQ respectively. However, with 2026 HBM contracts yet to be finalized and intensifying competition anticipated, we project SK Hynix's 2026 HBM ASP growth to turn negative, at -6% YoY (previously +7% YoY). We have consequently lowered our target price from KRW 430,000 to KRW 380,000.

Target Price Downgrade (₩430,000 → ₩380,000)

HBM Supply Increase Risk: Potential for oversupply starting in 2026.

ASP Scenario:
HBM5 Introduction Based ASP: Lowered from +3% to -3%
HBM ASP Growth Rate: Adjusted from +7% to -6% YoYEPS Impact: 2026E/2027E EPS projected to be lowered by -12%/-14% respectively.

Target Price Calculation Basis: Applying a P/E multiple of 2.4x (down from 2.6x).
Investment Rating: Maintained at 'Buy', expecting continued AI demand and memory demand recovery.


Target price raised to NT$1,600 (from NT$1,370), implying 23% upside from current levels. ADR target price raised to USD 320 (vs. current price of USD 273, 17% upside).

Summary: Shares Goldman Sachs Buy on TSMC with PT raised to NT$1,600 / ADR $320, implying 17-23% upside on AI-driven N2 ramp and revenue CAGR of ~19% to 2030.

TSMC 2027 Growth Re-acceleration and AI-driven Long-term Growth Momentum, Target Price Raised (Goldman Sachs)

1. Growth Outlook
    • 2026 revenue is expected to grow +18.9% YoY in USD terms, and +20.4% in 2027, revised upward from previous forecasts.
    • N2 process demand expansion: after initial demand from smartphone and HPC clients, AI will drive the second wave of demand in 2027. N2 capacity/shipments are revised up to 1,230k/990k (from 990k/780k).
    • N2 revenue contribution is now projected at 9.6% in 2026 and 21.4% in 2027, higher than prior forecasts.
    • 2026E Capex raised to USD 44bn (from 42bn); 2027E Capex maintained at USD 50bn.

2. AI Demand Momentum
    • According to Nvidia, the AI infrastructure market is expected to grow from USD 600bn in 2025 to USD 3–4tn by 2030, a CAGR of about 42%.
    • TSMC’s AI revenue is also expected to expand at a similar growth rate (mid-40s%). Even under conservative assumptions, total revenue CAGR of 17.2% from 2026–2030 is achievable.
    • Assuming 5% growth in non-AI revenue, total revenue could reach USD 292bn by 2030, a CAGR of 19.3%.

3. FX and Profitability
    • USD/TWD assumption revised up to 30 (from 29), with positive implications for revenue and margin.
    • Since most revenue is USD-based and ~75% of costs are TWD-based, NT dollar weakness benefits gross margin (a 1% NT appreciation reduces GM by ~40bps).
    • 2025–2027E GM revised up to 58.5% / 58.2% / 58.2% (from 57.9% / 57.9% / 57.4%).

4. Earnings and Valuation
    • EPS estimates revised up by +2.1%, +3.6%, and +9.4% for 2025–2027E.
    • 2027E EPS projected at NT$84.8, implying P/E of 15.3x — still undervalued compared with long-term averages.
    • Target price raised to NT$1,600 (from NT$1,370), implying 23% upside from current levels.
    • ADR target price raised to USD 320 (vs. current price of USD 273, 17% upside).

$TSM


Summary: Samsung reportedly failed 12-HI HBM3E qualification, implying MU benefits while Samsung loses share.

SAMSUNG SEEMS TO HAVE ULTIMATELY FAILED THE QUALIFICATION TEST FOR ITS 12-HI HBM3E — ACCORDING TO A LOCAL KOREAN SECURITIES REPORT.

$MU

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https://t.co/u4jHzGD8ir


SAMSUNG SEEMS TO HAVE ULTIMATELY FAILED THE QUALIFICATION TEST FOR ITS 12-HI HBM3E


we raise our target price to 560,000 KRW… We maintain SK hynix as our top pick in the sector

Summary: KIS raises SK Hynix TP to 560,000 KRW (+36%), top pick on memory upcycle through 2027, 2026 OP raised to 70T KRW.

KIS: SK hynix (000660) – Target Price 560,000 KRW

3Q25 Preview: Venturing into Uncharted Territory

3Q25 Earnings Expected to Beat Consensus
We project Q3 revenue of 25.1 trillion KRW (+13% QoQ, +43% YoY) and operating profit of 12 trillion KRW (+31% QoQ, +71% YoY), exceeding the consensus estimate of 10.8 trillion KRW by 11%. Server DRAM demand is surging, and DRAM bit growth in Q3 is expected to surpass guidance. NAND will also exceed expectations, driven by soaring demand for QLC eSSDs used in AI storage, boosting both revenue and profit at subsidiary Solidigm. HBM sales once again surpassed plan in Q3, accounting for 43% of DRAM revenue and 48% of total operating profit, driving the strong performance.

Upward Revision of 2026 ASP and Profit Estimates
Conventional DRAM demand is rapidly rising, led by OpenAI and others supporting AI workloads, which is pushing server DRAM ASP higher. While hyperscalers are aggressively expanding data centers and generating simultaneous server demand, memory suppliers have maintained conservative investment over the past two years, making it difficult to increase supply in the short term. We raise our 2026 ASP forecast for conventional DRAM from +15% to +30%, and revise HBM ASP from –2% decline to +8% increase. Reflecting this, we lift our 2026 annual operating profit forecast from 54 trillion KRW to 70 trillion KRW. Although annual HBM contracts are still under negotiation, the narrowing margin gap with conventional DRAM, combined with supply shortages requiring vendor allocation, suggests HBM prices will likely rise beyond prior expectations.

Target Price Raised, Maintains Top Pick in the Sector
Based on the upward earnings revision, we raise our target price to 560,000 KRW (12MF BPS 245,997 KRW, target PBR 2.5x), a 36% increase from the previous target. We expect the memory upcycle to be the longest in history, lasting until 2027. Given the transformed nature of the memory cycle and the elevated profit levels, we set the target PBR at 2.5x. Considering supply conditions unlikely to be resolved in the near term, both ASPs and earnings still carry upside risk. We maintain SK hynix as our top pick in the sector.


Summary: MediaTek to drop tomorrow as NVIDIA acquires Intel x86 capability, likely canceling NVIDIA's ARM-based N1/N1X; Wintel play favors Intel.

Investment Idea: MediaTek will drop tomorrow.

NVIDIA has now gained Intel’s x86 CPU capabilities.

I wouldn’t be surprised if NVIDIA’s N1/N1X ends up being canceled.

From NVIDIA’s perspective, leveraging Wintel is far better than trying to build Windows on ARM from scratch.


NVIDIA has now gained Intel's x86 CPU capabilities. From NVIDIA's perspective, leveraging Wintel is far better than trying to build Windows on ARM from scratch


picked up some Nvidia. I think we'll be hearing good news in the next few weeks

Summary: Bought Nvidia expecting good news in coming weeks.

I took profits on AMD and picked up some Nvidia.
I think we’ll be hearing good news in the next few weeks.


We maintain our Buy rating on NVIDIA (NVDA), our top pick in the sector... We raise our PO from $220 to $235

Summary: BofA reiterates Buy on NVDA, raises PO to $235; top sector pick on 80%+ AI infra market share, $10+ EPS power by CY27, Blackwell ramp, and compelling PEG vs. peers.

BofA) NVIDIA: Solid Position Amid the Most Attractive Visible Growth Opportunity, Price Objective (PO) Raised to $235

1. Ignore China-related noise, focus on ~ $10 EPS potential in CY27

We maintain our Buy rating on NVIDIA (NVDA), our top pick in the sector. NVIDIA holds a solid position with over 80% market share in the fastest-growing and most attractive global AI infrastructure build-out market, backed by an industry-leading free cash flow (FCF) margin of over 45% and a valuation at roughly 1x earnings growth (compared to the S&P 500 and Mag-7 peers trading at more than 2x PEG). While China-related uncertainty remains, the geopolitical hurdles around exports to China—which we fully exclude from our model—are expected to be more than offset by performance in the rest of the world (FY26E sales of ~$200bn). Overall, we raise our FY26/27/28 pro-forma EPS estimates by 6%/7%/11% to $4.45/$6.26/$8.03, respectively. Our forecasts assume annual revenue growth of $30–35% over 2025–27, and considering NVIDIA’s cited “industry 50% growth,” we estimate EPS power of over $10 by 2027 (with potential to reach $15 longer term). In the near term, given shares are up over 35% within the quarter and expectations are elevated, volatility is possible. However, we expect an upward trend to resume as investors revisit NVIDIA’s strong fundamental outlook. We raise our PO from $220 to $235, continuing to apply a 37x FY26E PE multiple, which aligns with the mid-range of NVIDIA’s historical PE band (25x–56x).

2. Positives: Blackwell ramp, GM, Networking, Rubin

Blackwell Ultra is now in full production mode, producing ~1,000 racks per week (ASP ~$3m, equating to ~$39bn revenue) with further acceleration expected through 3Q. As system-level racks mature and economies of scale kick in, gross margins (GM) could recover faster toward the mid-70% range. Networking (NVLink “switch-up”; Spectrum-X “switch-out”) will also continue to benefit. Spectrum-X currently runs at an annualized revenue rate of $10bn, up from $8bn in April. Finally, next-gen Rubin remains on track for CY26 (FY27) launch, sustaining NVIDIA’s hardware lead of 0.5–1.0 years versus AMD GPUs.

3. Risks: Slower near-term EPS revisions, China uncertainty

Due to China-related uncertainties and policy resets, near-term EPS estimate revisions could be more muted than in recent quarters. However, NVIDIA’s October-quarter revenue guidance of $54bn should be compared not to the current $53.5bn consensus, but to the pre-H20 licensing approval estimate of $51–52bn. Once H20 shipments begin, some previously written-off inventory could be reused, potentially boosting GM by 200–300bps.

4. FY2Q26 Earnings Highlights (Prepared Remarks)

1. Blackwell: FY2Q Blackwell grew +17% QoQ, reaching record levels; GB300 production started in the quarter.

2. Blackwell Ultra: The platform drove a very strong quarter, generating tens of billions in revenue.

3. Late July/early August fab conversions successfully supported GB300 ramp; currently at ~1,000 racks/week with further acceleration expected in 3Q as more capacity comes online.

4. AI TAM: NVIDIA projects AI infrastructure spend of $3–4tn by the late 2020s.

5. Cloud Capex: $600bn this year in data center infrastructure and compute.

6. Rubin: Chips are in-fab and on track for next year’s volume production.

7. China H20: Despite some licenses granted, NVIDIA shipped zero H20 chips to China. The U.S. government is expected to take 15% of licensed H20 sales.

8. H20 was excluded from 3Q guidance; if geopolitics ease, $2–5bn H20 revenue could be realized with additional supply.

9. NVIDIA sold $650m of H20 to non-China customers in 2Q.

10. RTX PRO: Fully ramped, air-cooled PCIe system for enterprise IT apps; ~90 firms adopted; expected multi-billion product line.

11. Sovereign AI: >$20bn sales expected this year, over 2x last year.

12. Networking: 2Q revenue hit a record $7.3bn (+46% QoQ, +98% YoY), with strong demand across SpectrumX Ethernet, InfiniBand, NVLink.

13. SpectrumX: Double-digit QoQ and YoY growth; annualized revenue >$10bn.

14. InfiniBand: Nearly doubled QoQ, driven by XDR adoption.

15. Regional Sales: China fell to low-single-digit % of DC revenue. Singapore represented 22%, with 99%+ billed for U.S.-based customers.

5. FY2Q26 Results vs. Estimates

1. Revenue: $46.7bn (+6% QoQ, +56% YoY), 1% above consensus $46.2bn and 4% above BofA’s $45.1bn.

2. Data Center: $41.1bn, modest miss vs. consensus $41.4bn, but above BofA $39.7bn (+5% QoQ, +56% YoY) despite $4bn H20 headwind.

3. Gaming: $4.3bn (+14% QoQ, +49% YoY), beating consensus $3.9bn by 11% and BofA $4.1bn, driven by Blackwell GeForce ramp.

4. Auto in line; Pro Visualization beat consensus by 13%; OEM beat by 56% (but small segment).

5. EPS: $1.05 (+30% QoQ, +54% YoY), beating consensus $1.01 by 4% and BofA $0.98 by 7%.

6. GM: 72.7% vs. consensus 72.1% (+54bps) and BofA 72.0%. Up 1,170bps QoQ (lapping prior H20 write-offs), but down 301bps YoY. Included $180m benefit (40bps) from reversing H20 reserves.

7. Op. Margin: 64.5% vs. consensus 63.5% (+102bps) and BofA 63.2%. Up 1,171bps QoQ, but down 183bps YoY. Opex rose 6% QoQ (infra + comp).

8. Inventory: Rose sequentially from $11bn to $15bn to support Blackwell/Ultra ramps.

9. Capital Return: $10bn returned via buybacks/dividends; board approved $60bn new authorization, in addition to $14.7bn remaining.

6. FY3Q26 Guidance (Above Consensus)

1. Revenue: $54bn ±2% (+16% QoQ, +54% YoY); midpoint above BofA $50.6bn and consensus $53.5bn. Does not include China H20 shipments.

2. GM: 73.5% ±50bps, above BofA 73.0%, in line with consensus 73.4%. Still guiding mid-70s non-GAAP GM through year-end.

3. Op. Margin: 65.7% implied, above BofA 64.6% and in line with consensus 65.6%.

4. EPS: $1.23 implied, +17% QoQ, +52% YoY, above BofA $1.13 and consensus $1.21.

5. Other: Other income expected +$500m; tax rate 16.5%.

7. Q&A Highlights

1. 2026 Growth Outlook; Networking vs. DC mix: Growth driven by inference/agent AI, which cuts hallucinations and enables tool use, requiring 100–1,000x more compute per task. NVLink72 delivers order-of-magnitude throughput gains, lowering token cost/energy. With cloud capex doubling to $600bn, supports $3–4tn AI infra expansion in 5 years.

2. H20 License; $2–5bn 3Q Potential; ASIC: Licenses being issued; supply ready. If resolved, $2–5bn shipments possible in 3Q. ASICs rarely reach volume and cannot match NVIDIA’s full-stack platform.

3. $3–4tn AI TAM; Share; Power Constraints: At $600bn hyperscaler capex, $3–4tn TAM is “sensible.” A 1GW AI factory ($50–60bn) yields NVIDIA content share of 35%. Power is the bottleneck: tokens per 100MW and perf/watt drive customer P&L.

4. China LT Outlook; Potential Blackwell License: China could be a $50bn opportunity this year, growing ~50% annually. ~50% of AI researchers are in China, with many open-source models originating there. NVIDIA pushing to bring Blackwell into China.

5. Spectrum XGS Opportunity: Tackles “scale-across” challenge by linking AI factories into “super-factories.” Raises utilization from 65% to 85–90%, unlocking $10–20bn profit from $50bn GW-scale factories.

6. + $7bn DC Sequential Growth; Hopper Strength: Blackwell is main driver of 2Q→3Q DC revenue growth, with NVLink boosting networking. H100/H200 (HDX) still shipping, but Blackwell is the key growth engine.

7. Rubin vs. Blackwell: Need annual cadence to improve perf/watt (tokens/energy) for cost savings/revenue gains. Blackwell inference perf/watt is order-of-magnitude over Hopper. Rubin to bring many new ideas (details later).

8. 50% CAGR TAM Visibility: “Very meaningful” visibility from major customer forecasts, continued new logos, and AI-native startup funding surge ($100bn last year → $180bn this year; could 10x next year). H100/H200 sold out, hyperscalers leasing capacity elsewhere. Demand remains robust, underpinning strong growth outlook.

$NVDA


Summary: BofA adopts bullish memory upcycle thesis: SK Hynix as core beneficiary, Micron on HBM+DRAM recovery, Samsung undervalued; DDR5/HBM4/China demand driving the cycle.

DDR5 Surge, Next-Gen Rubin Memory Architecture, and China’s Demand Recovery Driving the Memory Upcycle (BofA)

1. Industry and Price Cycle
    • DDR5 spot prices rose 10% this week, hitting record highs and shifting from a gradual recovery into a sharp rally, confirming the upside of the cycle.
    • DDR4 also climbed 6%, showing that even legacy products are rebounding strongly, signaling tight supply-demand conditions across the board.
    • Key drivers include PC/server replacement demand, production shifts from DDR5 to HBM4 and GDDR7, and distributors building inventories ahead of anticipated Q4 shortages.
    • DRAM contract prices: DDR4 surged 150% QoQ in Q3, while DDR5 continued its gradual uptrend. For Q4, DDR5 contract prices are expected to rise by over 10%, expanding earnings momentum.

2. Product and Technology Innovation
    • NVIDIA’s Rubin platform introduces a hybrid memory architecture of HBM4, GDDR7, and SOCAMM, expanding total memory capacity by 2.5x compared to Blackwell.
    • This design allocates tailored memory resources: HBM4 for AI training, GDDR7 for inference, and SOCAMM for CPU computing—supporting both qualitative and quantitative growth in memory demand.
    • SOCAMM does not require TSV processing, lowering costs, and partially substituting DDR5 demand, which could prolong memory shortages.

3. Positioning of Korean Companies
    • Samsung Electronics has passed NVIDIA’s quality test for its 12-high HBM3e, securing the foundation for full-scale mass production. Although SK hynix’s dominance is unlikely to be challenged in the short term, Samsung is expected to ship about $1 billion worth in Q4, rapidly contributing to revenue.
    • SK hynix benefits from both its HBM market leadership and surging DDR4/DDR5 prices, emerging as the core beneficiary of the upcycle.
    • Micron is also set to benefit from both DRAM price recovery and its entry into HBM, strengthening its cyclical rebound.

4. China Demand Recovery
    • China’s semiconductor equipment imports rose 12% YoY in August, far above market expectations (around 0%), partly influenced by Korean memory makers’ fab expansions in Xi’an and Wuxi.
    • Investments in equipment and infrastructure are being front-loaded ahead of new U.S. export controls in December, creating a short-term demand boost.
    • Huawei’s next-gen GPU roadmap (Ascend series) remains at the HBM2 level but includes plans to adopt HBM4 by 2028, strengthening long-term demand momentum.

5. Valuation and Stock Trends
    • SK hynix and Micron are trading above 2x P/B, a level historically associated with cycle peaks, reflecting strong confidence in the uptrend.
    • Samsung Electronics and Nanya remain relatively undervalued, leaving room for valuation re-rating.
    • Overall, AI-driven investment and HBM4 expectations are powering memory stocks higher, with SK hynix and Micron maintaining YTD strength.

6. Conclusion
    • The combination of a DDR5/HBM-driven price rally, Rubin’s architectural innovation, and China’s unexpected demand recovery is powering a strong global memory upcycle.
    • Korean memory makers enjoy a triple tailwind: technological leadership in HBM, cyclical price gains in DRAM/NAND, and Chinese investment demand.
    • With both qualitative and quantitative improvements confirmed, maintaining a positive outlook on the memory sector remains warranted.


Micron is also set to benefit from both DRAM price recovery and its entry into HBM, strengthening its cyclical rebound


Samsung Electronics and Nanya remain relatively undervalued, leaving room for valuation re-rating


maintaining a positive outlook on the memory sector remains warranted

Global DRAM memory basket: Micron, SK Hynix, Samsung


Summary: DRAM ASPs forecast +8–13% QoQ in 4Q25 (up to +18% incl. HBM) on server demand surge and capacity shift toward advanced/HBM nodes.

Global DRAM basket: Micron, Samsung, SK Hynix

▶ DRAM Prices to Continue Rising in 4Q25, Server Demand Surges Ahead While Legacy Process Products See Steeper Increases

    • The three major memory makers are prioritizing advanced process capacity for high-end server DRAM and HBM, which naturally reduces capacity allocation for PC, mobile, and consumer DRAM product groups.
    • n 4Q25, generic DRAM ASPs are expected to rise 8–13% QoQ, and including HBM, the increase could expand to 13–18%.

⸻

[PC DRAM: Modest Price Increase, U.S. CSPs Considering Early Procurement of Server DRAM]
    • PC shipments in 4Q25 are expected to decline due to weaker momentum from promotions and slower inventory restocking. Accordingly, major OEMs are reducing their DRAM bit procurement.
    • Meanwhile, as memory makers aggressively shift capacity toward server DDR5 products, supply constraints for PC DDR5/DDR4 persist.
    • As a result, PC DRAM ASPs are expected to show a mild but steady upward trend throughout the quarter.
    • Global CSPs are projected to significantly increase memory procurement in 2026, and some U.S. CSPs have already shown moves to start securing supply from 4Q25 to ensure sufficient inventory.
    • Although suppliers are actively adjusting capacity, technical issues at some vendors and the prioritization of HBM4 capacity allocations create continued uncertainty in DDR5 supply.

⸻

[Mobile DRAM Prices Rising, Graphics DRAM Demand Sustained, Consumer DRAM Growth Slows]

    • Suppliers have reduced shipments of LPDDR4X used in mid- to low-end smartphones. Brands, seeking to avoid supply disruptions, increased procurement, which has worsened the imbalance. Consequently, LPDDR4X prices are expected to rise +10% QoQ in 4Q25.
    • LPDDR5X products are expanding beyond premium smartphones into other categories, and given supply dynamics and pricing strategies, LPDDR5X prices are also likely to continue rising.
    • The PC inventory restocking cycle and expectations around NVIDIA’s RTX 6000 series launch are supporting strong demand inflows for graphics DRAM, especially GDDR7.
    • Suppliers are anticipating shortages and have begun raising prices, with GDDR7 prices expected to increase more steeply than in the prior quarter.
   • Suppliers are maintaining firm DDR4 pricing in consumer DRAM, but supply conditions remain limited. Following the sharp spike in 3Q25, buyers have scaled back inventory procurement.
    • Accordingly, DDR4 price increases are expected to moderate in 4Q25. Meanwhile, DDR3 still benefits from early procurement demand, and with capacity conversions and rapid inventory depletion, its price increases are expected to continue.


Summary: Shares CLSA bullish view: Samsung foundry turns profitable from 2H26, valuation multiple recovery likely on Tesla 22.8T KRW order.

Hong Kong CLSA Expects Samsung Foundry to Turn Profitable from 2H 2026

Samsung Electronics announced a foundry order worth approximately 22.8 trillion KRW. Although the contract party remains undisclosed, Bloomberg reported it to be Tesla. The contract is said to involve the production of 2-nanometer process-based chips for Tesla's autonomous driving technology and humanoid robots at Samsung's Taylor, Texas plant. This is interpreted as a sign of the market's regained confidence in Samsung's advanced foundry capabilities, and it also suggests the potential for expanding major client relationships.

This order value accounts for approximately 7.6% of Samsung Electronics' total revenue in 2024, and about 86% of the Foundry and LSI business unit's revenue. If recognized uniformly over the project period, it is estimated to be approximately 2.7 trillion KRW annually. Samsung Electronics' external foundry customers include Qualcomm, Google, Tesla, NVIDIA, and Nintendo. As of 2024, this division recorded an operating loss of approximately 5.6 trillion KRW, and a loss of 6.6 trillion KRW was projected for 2025. However, this order is expected to reduce losses and bring about a structural turnaround starting from the second half of the year.

Samsung Electronics' foundry business has been losing market share to TSMC over the past four years, with its share dropping to 7.7% as of Q1 2025, a significant decrease from 19% five years ago. Customer attrition also continued due to yield degradation and delays in process transitions. However, this order appears to be the first visible sign of the results from Samsung's restructuring and technology investments, providing momentum that could lead to new orders from other clients in the future.

CLSA assessed that this contract will strengthen the justification for investment in the Taylor plant, forecasting an operating profit turnaround from 2H26 and the possibility of valuation multiple recovery. Accordingly, doubts about the sustainability of profitability are expected to ease, and the market is highly likely to positively reflect the possibility of a turnaround in the foundry business.


Summary: Shares Goldman Sachs Buy on TSMC with PT raised to NT1,370; on APAC Conviction List on AI/HPC/EV structural growth.

Goldman Sachs Raises TSMC Price Target from NT1,210 to NT1,370

APAC Conviction List

- Applies a 20x P/E to 2026 EPS.

- Maintains technology leadership with over 60% global foundry market share.

- Expected to benefit from long-term structural growth in AI, HPC, 5G, and EV sectors.

- Potential to achieve around 20% revenue CAGR in the future.

- Valuation remains attractive, positioned at the lower end of its 10-year band.

$TSM


Summary: Shares Nomura's Memory Supercycle thesis: DRAM margins to ~70%, NAND breakout, HBM ASP +15%/yr; SK Hynix key beneficiary.

Nomura Securities: On the Memory Supercycle

AI and Data Center Demand Explosion
    • U.S. Big Tech companies are expected to continue expanding their AI server investments, with traditional server capital expenditures projected to grow by about 20–30% in 2026.
    • Accordingly, DDR4/DDR5 memory demand is expected to increase by around 50%, and enterprise SSD demand is projected to nearly double.
    • Due to HDD supply shortages and surging AI storage demand, the NAND market is also set to boom, with bit shipments in 2026 forecast to rise more than 50% YoY.

⸻

Price and Profitability Surge
    • DRAM operating margin is projected to climb from the current 40–50% range to nearly 70% in 2026, approaching the peak levels seen during the 2017 supercycle.
    • NAND margins are expected to break out from the current breakeven point to 30–40%.
    • HBM competition is likely to intensify (with Samsung expected to rejoin NVIDIA’s supply chain in 2026). However, blended ASP is still forecast to maintain 15%+ annual growth through 2025–2026, contributing to around 75% of SK Hynix’s operating profit.


blended ASP is still forecast to maintain 15%+ annual growth through 2025–2026, contributing to around 75% of SK Hynix's operating profit


The Trump administration's actions this time will raise the valuation floor for Intel.

Summary: Bullish INTC: US government equity involvement raises the valuation floor, preventing downside.

I’m glad that Kuo and I seem to share similar views!

That’s right. Intel is like a “too big to fail” entity—it’s simply too large to collapse.

The Trump administration’s actions this time will raise the valuation floor for Intel. https://t.co/dwrTa5X39k

Analysis of the U.S. Government’s Equity Investment in Intel

This deal doesn't guarantee the technology gain, but it prevents the valuation pain

Full story
https://t.co/OtvnRW6mXu https://t.co/DPXZBEeNqP


I still believe it'll take a significant amount of time for Intel's stock to rise substantially. For their foundry business to normalize... it's going to take at least two years.

Summary: Intel stock recovery is years away; foundry normalization (external customers + tape-outs) needs at least two years before meaningful upside.

I've thought about this before, but I still believe it'll take a significant amount of time for Intel's stock to rise substantially.

For their foundry business to normalize, meaning securing external customers and having those products come to fruition, it's going to take at least two years.

Intel’s CEO Needs a Path to Profits to Win Over Stock Skeptics- BBG

Back in April, Intel Corp.’s newly appointed Chief Executive Officer Lip-Bu Tan told investors on his inaugural earnings call that turning around the troubled chipmaker would take time. That was three months ago https://t.co/tA2PJnMvOH


Summary: Relays Meritz thesis: Apple to cut BOE share mid-to-long term, benefiting SDC and LGD at BOE's expense.

Despite the recent ITC ruling, is Apple still expected to use BOE panels for the iPhone 17?

Among the four iPhone 17 models to be released this year, the iPhone 17 and iPhone 17 Air are expected to adopt panels from BOE. Even if the recent ITC ruling results in a ban on the use of BOE panels, Apple is likely to first allocate the models using BOE panels to other regions. However, in the mid to long term, considering the business uncertainty associated with using BOE, Apple is likely to significantly reduce their share. In such a case, SDC and LGD are expected to benefit in the long run.

Source: Meritz Securities Korea


Apple is likely to significantly reduce their share

BOE Technology Group 200725.SZ Shenzhen B-share


Summary: Citi reiterates Buy on VNET and GDS; H20 sales resumption and RTX6000D shipments drive upside in orders/revenue/EBITDA for Chinese IDCs.

Citi) China Data Centers - Thoughts on H20 Sales and Latest RTX6000D Shipments; 'Buy' on VNET/GDS

According to a Reuters report on July 15, NVIDIA will resume sales of H20 chips to China and has launched new models that meet the regulatory requirements of the Chinese market. CEO Jensen Huang expects licenses to be granted this time. We believe this is positive for Chinese Internet Data Centers (IDCs) such as VNET/GDS, as more orders could materialize if NVIDIA is ultimately able to sell its accumulated H20 inventory to Chinese Cloud Service Providers (CSPs), leading to an upside in VNET/GDS's EBITDA and revenue.

Digitimes reported on July 15 that shipments of RTX6000D (a downgraded version) could reach 1-2 million units in 2025. While shipments may not be very high this year, we believe both pieces of news are positive for VNET/GDS. The previous sector correction was mainly attributable to the H20 sales ban and weakened investment sentiment towards AI accelerator development in China.

We expect VNET/GDS to benefit from potential H20/RTX6000D sales, securing more upside potential in terms of orders/revenue/EBITDA. At the same time, if the H20 license approval and RTX6000D shipments materialize, the beta of AI-related stocks across China could also be re-rated. We maintain our 'Buy' rating on VNET/GDS.


Summary: Shares Citi's bullish GOOG thesis: Gemini token usage surging, Cloud demand accelerating, 60% of gen-AI startups on Google Cloud.

As of June 2025, Gemini’s token usage had increased to 980 trillion per month, a sharp rise from 480 trillion in April. Citi highlighted that this has driven a concurrent increase in Google Cloud demand, with new customers up 28% QoQ, and the number of large contracts over $250 million doubling YoY.

In addition, Gemini’s monthly active users (MAU) reached 450 million, and Citi assessed that the figure may have surpassed 500 million by September.

At the same time, Gemini’s daily request volume rose 50% QoQ in 2Q, with new features such as AI-Overviews and AI-Mode being rolled out rapidly. Citi also pointed out that about 60% of generative AI startups have chosen Google Cloud, and 9 out of the top 10 AI labs are using Google Cloud.

$GOOG

Citi commented that Google’s 2026 capital expenditures (Capex) are expected to reach $111 billion, representing a 29% YoY increase, or about an additional $25 billion. The 2024–2029 CAGR is projected at 26%, with roughly two-thirds allocated to servers and the remaining one-third https://t.co/7wHrMKaA6D


Summary: H20 China resumption means consensus estimates rise ~10%; bullish for NVDA near-term.

"In reality a handful of the 40 analysts have already factored in the return of the H20 before tonight’s announcement.

That means that Street estimates should rise by about 10% on the news."

What does Nvidia resuming H20 to China mean to numbers.

In theory that should add back about 15% to Street estimates. Last quarter the company outlined that impact.

In reality a handful of the 40 analysts have already factored in the return of the H20 before tonight’s


Citi has added Samsung Electronics to its 30-day Upside Catalyst Watch list… Citi has raised its target price from KRW 83,000 to KRW 90,000

Summary: Shares Citi's 30-day Upside Catalyst Watch add on Samsung with PT raised to KRW 90,000 on foundry recovery and GDDR7/HBM demand.

250717_SEC: Potential Tailwinds from Foundry and Memory Businesses - CITI

(1) Citi has added Samsung Electronics to its 30-day Upside Catalyst Watch list.

(2) This is due to Citi's assessment that, despite potentially disappointing 2Q25 earnings, investor sentiment for 2H25 is likely to improve.

(3) This improvement is attributed to 1) the gradual recovery of foundry utilization rates, and 2) increased demand for GDDR7 and eSSD driven by the proliferation of AI inference models.

(4) Samsung Electronics holds a strong market position in the GDDR7 segment, and the possibility of passing HBM3E 12-Hi qualification tests is a positive factor. Consequently, Citi has raised its target price from KRW 83,000 to KRW 90,000.

(5) Foundry utilization rates are expected to recover: improving from 60% in 1H25 to 77% in 2H25.

(6) The improvement is attributed to increased Exynos chip production, and the foundry operating loss is projected to shrink to approximately KRW 1.2 trillion in 3Q25.

(7) Furthermore, in the mid-to-long term, Samsung is expected to produce Exynos on a 2nm process, and there is a possibility of securing additional 2nm orders from external clients.

(8) Meanwhile, given the limited HBM supply, GDDR7 and similar products are expected to be more actively utilized as alternatives.

(9) This is due to expanding memory demand for AI inference. If Samsung passes NVIDIA's qualification tests in 3Q25, there is a possibility of an upward revision in earnings.

(10) HBM4 qualification is expected around 1Q26.


Isn't 14A Too Late? The 2028-2029 timeline seems too slow in my view... Intel's intention to build an AI platform based on x86... is a long-term endeavor with low customer appeal... their ability to succeed with ASICs is full of uncertainty

Summary: Bearish INTC: 14A timeline too slow vs TSMC, IFS lacks external orders, ASIC strategy faces structural headwinds from custom silicon adoption.

Some Light Thoughts on the Intel Call:

1. Regarding IFS (Intel Foundry Services): Isn't 14A Too Late?

The 2028-2029 timeline seems too slow in my view. Especially by then, TSMC's 1.4nm process will likely be ramping up. I question whether TSMC's A14 and Intel's 14A can truly compete. I understand that even within Intel, 14A is seen as competitive with TSMC's 2nm, not A14.

Moreover, Intel emphasizing that 18A can generate profit from internal products alone can only be interpreted as a sign that external customer orders are still insufficient.

2. ASIC: Still Closer to Wishful Thinking
Intel's intention to build an AI platform based on x86, aiming to capture the ecosystem like NVIDIA, is a long-term endeavor with low customer appeal.

Adjusting their target to focus on inference and edge rather than training is a pragmatic shift. However, the problem is that customers are increasingly adopting their own ASICs for inference rather than using Intel's chips.

I question whether Intel can beat a strong competitor like Broadcom in the inference space. Especially with the recent significant reduction in Gaudi 3 production and the cancellation of Falcon Share, their ability to succeed with ASICs is full of uncertainty.

Intel FY2Q25 Conference Call (After Hours -4.2%)

▶ FY2Q25 Key Comments

Complete Review of CEO-Direct Organizations: Workforce, costs, and restructuring completed.

- Workforce reduction targeting 75,000 employees by year-end, with management layers reduced by 50%.
- Expansion


Summary: Citi bullish on optical module super-cycle driven by ASIC/SiPh; top pick Innolight, sector re-rating from 15x to 20x FY26 PE expected.

Optical Module Industry: ASIC & SiPh Drive a Super-CycleCiti (L. Tsang, 08/14/25)

Industry Demand and Growth Expectations

Citi raises its 2026 demand forecast for optical modules, expecting demand for 800G modules to reach 45 million units and 1.6T to reach 8 million units. The main drivers are strengthening demand for ASICs, cloud infrastructure upgrades, and new AI infrastructure customers such as Oracle and Coreweave. The analyst believes the market underestimates the profitability improvement brought by the migration to Silicon Photonics (SiPh), projecting that gross margins for 800G/1.6T SiPh optical modules could reach over 45–50%.

ASIC & SiPh Drive an Industry Super-Cycle

Citi believes the ASIC up-cycle starting in 2026 will further solidify the growth logic for optical module manufacturers. As the AI accelerator attach rate increases, demand for optical modules could be amplified by more than 20 times if combined with LPO technology. Simultaneously, the replacement of front-end networks is creating upgrade demand for 800G optical modules. The large-scale adoption of SiPh will also drive gross margin improvement and upward EPS revisions, thereby creating a "super-cycle" for the optical module industry.

Valuation Re-rating Logic

Currently, investors generally assign a forward P/E multiple in the mid-to-high teens to optical module companies due to concerns about cyclicality, a potential peak in AI capital expenditure, and the risk of substitution by CPO (Co-Packaged Optics). However, Citi argues that a 20x valuation is more reasonable for the following reasons:

- ASICs will bring sustained growth for the next 2–3 years.

- Inference-related AI capital expenditure is more sustainable.

- Large-scale CPO adoption is not expected until 2029–2030.

- Tier-1 vendors (like Innolight, Eoptolink) have a stable market share.

- Increasing SiPh penetration will lead to improved profitability.

Valuation and Stock Selection

Citi has updated its models for Innolight, Eoptolink, and TFC, expecting industry growth in 2026 to be driven by ASIC opportunities, AI investments from US cloud vendors, and SiPh penetration exceeding 50%. Among them, Innolight is Citi's top pick due to its leading market share, stronger customer stickiness, and advantages in 1.6T products. Meanwhile, technology upgrades and BOM optimization are expected to gradually materialize into gross margin improvements in the second half of 2025. Currently, Innolight and Eoptolink are trading at around 15x FY26 PE. Citi expects that as the ASIC super-cycle and SiPh dividends materialize, the industry's valuation could rise to 20x. Any pullback in the stock price would present an opportunity to increase positions.

*Note: Citi's forecasts have always been quite bullish and high; the actual expectations are likely not this high.


Any pullback in the stock price would present an opportunity to increase positions

Optical modules basket: Coherent, Lumentum, Ciena, AAOI


Summary: Shares thesis: BESI leads hybrid bonding with durable tech moat; Hanmi faces structural long-term threat from hybrid bonder transition starting 2027.

Next-Generation HBM ‘Hybrid Bonder’ Technology Led by Overseas Firms, Korean Equipment Makers Could Be Squeezed Out

Experts say that equipment for “hybrid bonding” used in next-generation high bandwidth memory (HBM) has already been fully developed by overseas companies, with only the hurdle of price remaining.

As a result, concerns are rising that domestic HBM bonding equipment developers such as Hanmi Semiconductor and Hanwha Semitek may fall behind in technology development and lose the market.

Samsung Electronics, which has been accelerating its catch-up in the HBM market, is reportedly preparing to build a test production line for hybrid bonding equipment.

On the 20th, the Institute of Industrial Education and Research held the “Seminar on Hybrid Bonding and Packaging Material Trends Leading HBM-AI Semiconductor Innovation” at the Lifelong Education Center in Gasan-dong, Geumcheon-gu, Seoul.

At the seminar, Joo Seung-hwan, professor at Inha University Graduate School of Manufacturing Innovation, who is researching hybrid bonding equipment for HBM with LG Electronics, said, “HBM hybrid bonding equipment can already be considered technically complete,” and added, “The delay in adoption is due to the fact that costs are three times higher.”

Unlike the existing TC bonder that uses thermo-compression, hybrid bonding connects chips directly without bumps. It can reduce semiconductor thickness and dissipates heat about 100 times faster than TC bonders. It is already being used in the production of logic semiconductors, image sensors (CIS), and NAND flash.

Professor Joo said, “Korea is late in developing hybrid bonders, and from a national perspective, the situation is not favorable for competitiveness in hybrid bonding equipment.”

According to U.S. brokerage Bernstein, Dutch semiconductor equipment manufacturer BESI, in partnership with U.S.-based Applied Materials, is leading in hybrid bonding technology. Bernstein predicts that Samsung Electronics, SK Hynix, and Micron are all highly likely to adopt BESI’s hybrid bonder for future next-generation HBM production.

The full-scale adoption of hybrid bonders is expected to begin with the production of 16-layer and 20-layer HBM4 and HBM5 products. As the number of stacked DRAM layers increases, the need to reduce thickness grows, and heat dissipation becomes more critical.

David Dai, a Bernstein researcher, forecasted that after sample testing in 2026, hybrid bonders will be applied in earnest starting with the 7th-generation HBM4E in 2027, with Samsung Electronics and Micron expected to adopt the technology first.

Samsung Electronics, which has been accelerating its catch-up in HBM, is moving quickly. A semiconductor equipment industry insider said, “Samsung is preparing to set up a hybrid bonding test line in some HBM production plants.”

As overheating issues were cited as one of the reasons Samsung had difficulty obtaining Nvidia’s certification for its HBM3E 12-layer product, the adoption of hybrid bonding, which can increase heat dissipation capacity by up to 100 times, is expected to serve as a stepping stone for catching up.

SK Hynix, which currently leads with HBM manufactured using TC bonders, is expected to be relatively slow in adopting hybrid bonding. This is because numerous TC bonders are already deployed in its production facilities, making it less necessary to replace them with expensive hybrid bonders.

Korean semiconductor equipment makers such as Hanmi Semiconductor and Hanwha Semitek are increasingly concerned about falling behind in the hybrid bonding equipment race. Although they hold an overwhelming market share in TC bonders, they could be completely pushed out in the future hybrid bonder market.

U.S. brokerage Goldman Sachs stated, “Hanmi Semiconductor’s long-term issue is the transition from TC bonders to hybrid bonders,” adding, “From 2027 onwards, six competitors including BESI will enter the hybrid bonding equipment market, which will pose a major challenge for Hanmi Semiconductor.”

An industry insider said, “Hanwha Semitek is preparing to launch its second-generation hybrid bonder in the second half of this year, but it is likely to contain significant overseas technology,” adding, “Korean semiconductor manufacturing lacks infrastructure and basic technology, making it highly dependent on foreign solutions.”

Dutch company BESI has expressed strong confidence in the hybrid bonder market.

Besi CEO Richard Blickman said, “Constructive exchanges of opinions have taken place with major memory semiconductor companies,” adding, “Although the adoption of hybrid bonders has been delayed as HBM4 standards were eased, considering the heat limitations in data centers, the low power consumption and heat dissipation of hybrid bonding equipment will be a major strength.”

Goldman Sachs commented, “The technological complexity and ecosystem integration underpin BESI’s competitiveness in hybrid bonding,” predicting, “BESI will maintain a long-term technological lead in hybrid bonding, making it difficult for competitors to catch up.”

It added, “BESI has enjoyed multiple advantages, such as fine-tuning its process range with continuous feedback from the three major memory companies. Although alternative solutions are emerging in Korea, BESI has the strength of providing stable performance in large-scale environments.”

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https://t.co/K2INI02l8z


Summary: Shares JPM Buy on MU with PT raised to $185; raised guidance, HBM ramp, DRAM pricing strength through 2026.

Micron (JPM)

1. Results and Guidance

• Raises August-quarter revenue outlook to $11.2bn (vs. prior guidance midpoint of $10.7bn), non-GAAP gross margin to 44.5% (vs. 42% prior), and expects non-GAAP EPS of $2.85 (vs. $2.50 prior).

• The main driver is an improved pricing environment, with strong demand across all DRAM product lines for AI/datacenter, smartphones, and PCs.

• The 12-high HBM3E yield ramp is progressing faster than the 8-high, contributing to ASP/mix improvement.

• DDR5 and LPDDR5 price uptrends continue; DDR4 is seeing some tightness due to EOL.

2. Demand and Market Environment

• DRAM price strength is expected to continue through 2H25–2026.

• HBM demand has strong visibility through CY26, and the HBM4 ramp is expected to constrain non-HBM DRAM supply, maintaining upward price pressure.

• With expanding AI infrastructure investment, HBM revenue is expected to reach about $8bn annually (assuming annualized from the quarterly run rate).

• End demand across smartphones, PCs, and datacenters remains stable.

3. Competitiveness and Positioning

• Confident of fully absorbing/selling its entire HBM supply in FY26/CY26, with tighter roadmap alignment with key customers.

• Increasing the share of high-margin products in the portfolio, creating opportunities to gain market share.

• Continuing profitability improvement and cost-reduction efforts in the NAND business.

• Expecting to mitigate earnings volatility through product and market diversification.

4. Financial Outlook and Valuation

• FY25E revenue $37.28bn, EPS $8.11 → FY26E revenue $51.47bn, EPS $14.57.

• FY26E gross margin above 49%, with EBITDA margin expected at 54.7%.

• Target price raised to $185 (from $165), applying 2H CY26 annualized EPS of $17 × P/E 10–12x.

• EV/EBITDA multiple expected to decline from 7.5× in FY25E to 4.5× in FY26E.

$MU


it is time to buy into beneficiary companies such as Tokyo Electron … we maintain our Overweight rating on our covered companies

Summary: CLSA channel checks point to imminent Samsung 1-c DRAM capex; buy TEL/Eugene Technology/EO Technics as beneficiaries; cautious on Kokusai Electric/Wonik IPS/HPSP on share-loss risk.

250716_Semicap equipment: SEC's Capex for 1c DRAM coming soon - CLSA

(1) Our channel checks indicate that Samsung Electronics is soon expected to place large-scale capital expenditure orders for 1-c DRAM mass production.

(2) This is because, even though they haven't completely resolved all complex technical issues of 1-c DRAM, they have made progress in yield improvement sufficient to obtain internal Production Readiness Approval.

(3) Samsung Electronics is believed to be ready to execute investments to secure sufficient capacity for HBM4 and LPDDR5 demand in 2026.

(4) We believe Samsung Electronics has achieved a partial breakthrough, sacrificing some of the cost structure to begin 1-c DRAM mass production by the end of 2025.

(5) A year ago, 1-c yields were significantly low, but they have now reached approximately 50% at the lab level. This progress is mainly attributed to 1) core circuit redesign and 2) increasing die size to widen capacitor pitch.

(6) Further improvements in chip design and process will still be necessary. Key challenges include 1) addressing excessive EUV usage, 2) aggressive clocking, and 3) resolving low power efficiency issues. Solving all technical problems may require more time. * Risk of overlay misalignment between multiple EUV layers, affecting transistor variability.
* Increased process-induced parasitics, leading to leakage current and non-uniform cell characteristics.
* Greater manufacturing process variations, necessitating guard-banding (e.g., over-supplying voltage) at the design stage.

(7) Nevertheless, we anticipate a bold investment execution, primarily centered on P4.
(8) Our channel checks suggest that P4 line will begin orders in 2H25 to build 50K (monthly) 1-c DRAM CAPA. For 1H26, we forecast 40K/10K orders for P4/P3 respectively, and 30K for P3 in 2H26.
(9) To secure sufficient 1-c DRAM production volume for important customers like NVIDIA, Samsung is proactively starting with ample capacity to offset potential mass production yield risks that may arise in the future.

(10) Accordingly, we believe that regardless of the actual progress of 1-c DRAM, it is time to buy into beneficiary companies such as Tokyo Electron, Eugene Technology, and EO Technics, and we maintain our Overweight rating on our covered companies.

(11) Tokyo Electron: Expected to benefit from Samsung Electronics' DRAM investment due to its relatively high exposure to batch-type CVD equipment for titanium nitride (TiN) processes.

(12) EO Technics: Expected to supply laser annealing and marking equipment, and potentially femtosecond laser-based cutting equipment, for the P4/P3 lines dedicated to 1-c DRAM.

(13) Eugene Technology: Expected to benefit from Samsung Electronics' 1-c DRAM CAPEX execution due to its dominant market share in the LPCVD market, capable of controlling thickness and uniformity.

(14) However, we maintain a cautious stance on other equipment stocks such as Kokusai Electric/Wonik IPS/HPSP due to potential market share declines.


EO Technics: Expected to supply laser annealing and marking equipment … for the P4/P3 lines dedicated to 1-c DRAM

EO Technics 039030.KQ Korea KOSDAQ laser equipment


Eugene Technology: Expected to benefit from Samsung Electronics' 1-c DRAM CAPEX execution due to its dominant market share in the LPCVD market

Eugene Technology 084370.KQ Korea KOSDAQ LPCVD


we maintain a cautious stance on other equipment stocks such as Kokusai Electric/Wonik IPS/HPSP due to potential market share declines

Kokusai Electric 6525.T Japan batch CVD equipment


HPSP Co. 403870.KQ Korea KOSDAQ HP annealing equipment


Summary: Shares Nomura's raised TSMC PT to NT$1,280 on strong 2nm demand in 2026, driven by full Apple iPhone lineup adoption.

Nomura: TSMC Target Price Raised to NT$1,280 on Strong 2nm Demand in 2026

Nomura has raised TSMC's target price from NT1,170toNT1,280, forecasting that 2nm process demand will be a key growth driver in 2026. Notably, Apple is expected to fully adopt the 2nm process across its entire iPhone lineup starting in 2026, which is an expansion compared to its 2023 application solely in the high-end Pro series. This is projected to contribute approximately 4% of TSMC's wafer revenue.

$TSM

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https://t.co/cYCYmTZVkE


Summary: BofA reiterates Buy on Alphabet, Amazon, and Meta on AI-driven revenue upside despite rising D&A and margin timing risk.

BofA) Deep Dive into Internet Companies’ Capital Expenditures (CAPEX): Surging Capex and Depreciation & Amortization (D&A)
Rising capital expenditures by large internet companies are leading to higher depreciation and amortization (D&A).

1. Rising CAPEX = Rising D&A

As D&A is expected to rise, expectations for new AI capabilities and future revenue generation through AI infrastructure remain a key driver of investment sentiment and performance for large-cap internet stocks. In this report, we review the positive aspects and risks related to capex in the sector, present segment-specific capex estimates for major internet companies (Google, Meta, Amazon), and update depreciation estimates (for Meta). Our current capex forecasts are slightly above Street consensus (with room for further upside), and our depreciation estimates are even higher. The key points are as follows:

2. Positives: AI Capex Drives Growth and Efficiency

AI is emerging as a multi-dimensional growth driver for large internet companies, accelerating core businesses, creating new revenue streams, and improving operational efficiency.

1. Google: AI is boosting search ad profitability and accelerating cloud adoption, with rising AI compute demand leading to larger-scale contracts.

2. Meta: AI integration is improving content and ad targeting, driving higher engagement and improving ad conversion.

3. Amazon: Expanding capacity is translating into AWS revenue growth, while also improving efficiency in the retail distribution segment.

Beyond core businesses, AI is also opening up new opportunities. Google is expanding subscription services through Gemini Advanced, Workspace, and Vertex AI. Meta is offering automated ad campaigns and could launch premium AI services. Amazon is building shopping agents. In addition, AI can enhance productivity, curb headcount growth, and streamline support functions, thereby driving operating margin leverage. Looking forward, the ratio of capex to expected revenue is lower than in the past, suggesting potential for further revenue upside.

3. Risks: Margin Pressure, Short Asset Life, and Overcapacity

The key risks are as follows:

1. Margin pressure: AI-driven revenue streams may only begin to scale meaningfully in 2026–2027, whereas associated depreciation could rise earlier. This timing mismatch may pressure margins before new revenue is realized.

2. Short asset lives: AI infrastructure faces high workloads and rapid innovation cycles, which could shorten asset life spans. AI-related assets may require replacement every 3–5 years, pulling forward cost recognition and impacting profitability.

3. Overcapacity and pricing risk: The surge in AI infrastructure could outpace demand, while LLMs become increasingly commoditized as performance converges. If supply exceeds consumption (which we view as unlikely before 2027), hyperscalers may rely on aggressive pricing strategies to maintain utilization, hurting profitability.

4. Market Consensus Tends to Underestimate Depreciation

With sector capex growth at 56% in 2024 and an estimated 63% in 2025, we believe Street consensus still underestimates rising depreciation. Based on our updated analysis (detailed in the depreciation breakdown table), the market may be underestimating Google, Meta, and Amazon’s depreciation for 2026–28, and this gap could widen over time. In 2027, the difference between Street consensus and BofA estimates for depreciation is expected to be largest at Alphabet ($7B), followed by Amazon ($5.9B) and Meta (~$3.5B).

We already forecast higher depreciation for Alphabet and Amazon compared with consensus, and we are now revising up Meta’s depreciation forecast. Accordingly, we lower our 2027 EPS estimate for Meta by 3% to $34.96, though this remains above the Street’s $34.26 estimate thanks to stronger revenue forecasts. We maintain Buy ratings on Alphabet, Amazon, and Meta, reflecting the significant AI-driven revenue upside potential.


Summary: Morgan Stanley sees AVC, Quanta, and Delta as key beneficiaries of AWS IRHX liquid cooling adoption for high-density AI racks.

Quanta Computer listed on TWSE as 2382.TW

Liquid Cooling: AWS Launches Proprietary IRHX Liquid Cooling Solution, Benefiting Upstream Component Supply Chain

Morgan Stanley (S. Shih, 25/07/11)

Morgan Stanley points out that AWS has launched its self-developed IRHX liquid cooling solution to support high-density AI server racks, indicating an accelerating adoption of liquid cooling architecture during a transition period. Liquid cooling component manufacturers and system integrators in the supply chain are expected to be the first to benefit.

AWS Launches IRHX Liquid Cooling Solution, Suitable for High-Density AI Racks Like GB200 NVL72

AWS has introduced its proprietary In-Row Heat Exchanger (IRHX) liquid cooling solution, which can be inserted into existing or new data centers to support high-power AI racks. The IRHX consists of a manifold, pump units, and dry coolers, featuring modular scalability to dynamically increase or decrease dry cooler units based on thermal load.

IRHX Seen as Transitional Side-Car CDU Solution, Balancing Space and Efficiency But Requiring Attention to Water Leak Risk

IRHX is positioned as a transitional side-car CDU design before the widespread adoption of liquid-to-liquid solutions, capable of supporting 4 to 8 racks and saving data center space. However, its highly integrated nature may pose concerns such as water leakage risks or decreased cooling efficiency, requiring further observation of actual deployment effects.

Liquid Cooling Component Manufacturers to Benefit First, AVC Expected to Stand Out

As AWS does not have liquid cooling component manufacturing capabilities, relevant parts will depend on external suppliers. Morgan Stanley notes that AVC, with its expertise in cold plates, pump units, and dry coolers, and its close relationship with AWS, is expected to be in a favorable position during this adoption phase.

ODMs and System Integrators Play Key Roles, Quanta and Delta are Major Beneficiaries

IRHX is expected to be integrated by server ODM manufacturers, with Quanta being the primary ODM partner for AWS GB200 NVL72. Additionally, if AWS prefers partners with accumulated liquid cooling technology and firmware capabilities for integration, liquid cooling system providers like Delta are also expected to participate in IRHX deployment.


liquid cooling system providers like Delta are also expected to participate in IRHX deployment


Summary: Citi reiterates Buy on NVDA, raises PT $200→$210 on upgraded AI infrastructure outlook; Oct GTC event seen as positive catalyst.

Citi) NVIDIA: Mid-Quarter Update – Target Price Raised to $210 on Upgraded AI Infrastructure Outlook

Citi’s View
We spoke with NVIDIA and provide below a brief note on key investor focus points. While awaiting further details on the recent $100B OpenAI investment, we have become incrementally more constructive on NVIDIA’s roadmap and competitive positioning following the Rubin CPX GPU announcement. We forecast October/January quarter revenues of $54B/$62B, and we revise our 2026/2027 estimates by +1%/+10% in line with Citi’s updated AI infrastructure spending outlook and funding flow assumptions (see related report). Applying a consistent 30x P/E multiple to our revised 2026 EPS estimate of about $7, we raise our target price (TP) from $200 to $210 and see the October 27–29 GTC Washington event as a potential positive catalyst for the stock. We reiterate our Buy rating.

GPU vs. XPU — Management reiterated that its view on the debate between commercial GPUs and ASICs (application-specific chips) at Google and elsewhere has not changed, highlighting that the outlook remains solid and execution and roadmap confidence remain intact.

Rubin CPX Announcement — Management clarified that the one-year product cadence is unchanged and the CPX launch does not alter this. It will follow Vera Rubin, which is expected toward the end of 2026. CPX will be available as a standalone GPU as well as in configurations alongside Vera Rubin devices, designed to handle large-context inference. It is positioned as a product that augments the existing roadmap.

OpenAI Investment — This is separate from product shipments and is milestone-based, tied to NVIDIA acquiring equity if OpenAI proceeds with building gigawatt-scale capacity. As the company has noted previously, historically 1 GW of capacity requires about $50B in total capex. We believe NVIDIA’s highly competitive products, combined with rising user counts and compute consumption per user, are why OpenAI turned to NVIDIA for support. According to NVIDIA, OpenAI is facing difficulties securing data centers, land, and power and thus requires assistance. NVIDIA emphasized there is no preferential treatment or pricing; allocations are strictly determined by purchase orders (POs) and data center readiness. While each product has a single set price, if NVIDIA were to transact directly with OpenAI (which currently procures through partners), the economic terms for OpenAI could differ.

$NVDA


Summary: Samsung ahead of SK Hynix by up to 6 months on HBM4 mass production ramp, implying share gain.

Very interesting.

1. Samsung has achieved its target yield earlier than planned and is preparing for initial mass production.

2. The original expectation was that Samsung would begin HBM4 mass production at the same time as SK hynix or about 1–2 months earlier, but at the current pace, the large-scale mass production timing could be 3 to as much as 6 months ahead of SK hynix.

Samsung, Why the Confidence in HBM4 Next Year? Higher-than-expected Yield and Ramp-up Timing

While Samsung Electronics is solidifying its foundation for the revival of its semiconductor business, Chairman Lee Jae-yong recently returned from visiting big tech companies in San https://t.co/mVL7CpLXdQ


the large-scale mass production timing could be 3 to as much as 6 months ahead of SK hynix