TL;DR
• The May quarterly harvest, profit margins and August quarterly guidelines were over-anticipated and post-stock prices increased dramatically。
• CITIGROUP MAINTAINS A TARGET PRICE OF $1,200, BETS HBM, HIGH-END DRAM AND LONG-TERM SUPPLY AGREEMENTS。
• THERE IS STILL FEAR OF INCREASING COMPETITION AND SLOWING AI CAPITAL SPENDING, AND PRICING IN 2027 IS NOT LOCKED。

The Citigroup maintains a buy-in rating and gives a target price of $1,200 after the third financial season of 2026. As of 28 May, US$ 41,456 million was received in quarterly camps, US$ 25.11 million in non-gaAP EPAS and 84.9 per cent in the non-gaAP Maori rate. Reuters and Investing.com show that there was a dramatic increase of about 13% after the CD。

CITICORP THIS TIME MAINTAINS THE CORE OF THE HIGH TARGET PRICE, NOT ONLY IS THE SINGLE-SEASON PERFORMANCE HIGHER THAN EXPECTED, BUT IS THE AI SERVER DEMAND MOVING THE STORAGE CYCLE TO A HIGHER LEVEL. HBM AND HIGH-END DRAM SUPPLY STRAINS, SUPERSEDING MULTI-YEAR CUSTOMER AGREEMENTS, ALLOW THE MARKET TO BEGIN TO BELIEVE THAT THE PROFITABILITY OF U.S. LIGHTS MAY NO LONGER BE ASSESSED SOLELY ON THE BASIS OF TRADITIONAL STORAGE CYCLES。

THE CURRENT PRICE USED IN CITIGROUP IS $1047.92 AND THE TARGET PRICE OF $1,200 CORRESPONDS TO APPROXIMATELY 14.5 PER CENT OF THE STOCK PRICE INCREASE SPACE. THE VALUATION BASIS IS 10 TIMES THE EXPECTED EPS IN 2027, WITH THE KEY PREMISE THAT HBM PRICING WILL CONTINUE IN 2027 AND MORE LONG-TERM SUPPLY ARRANGEMENTS WILL LAND。

It's almost full-time, and it's close to 85%

In May, US$ 41,456 million was collected in quarterly camps, close to US$ 41,5 billion in calibration in Citigroup, which is higher than the US$ 35.5 billion estimated by Citi and US$ 35.9 billion anticipated by FactSet. The official disclosure of non-GAAP EPS is $25.11, which is above the market consensus。

Profit rates are more indicative of the intensity of supply and demand for this round. According to official U.S. Government, in May the GAAP Māori rate was 84.6 per cent and the non-GAAP Māori rate 84.9 per cent. While income over-expecteds are important for storage companies, the Māori ratio is high, indicating that price increases and improvements in product structure are entering profit tables。

DRAM CONTINUES TO BE THE LARGEST INCREMENTAL SOURCE BY CITIGROUP CALIBER. THE MAY SEASON OF DRAM REVENUES WAS ABOUT $31.3 BILLION, HIGHER THAN THE FLAG ESTIMATE OF $28.4 BILLION AND MARKET EXPECTATIONS OF $27.6 BILLION. THE NAND REVENUE OF APPROXIMATELY $9.9 BILLION ALSO EXCEEDS THE FLAG ESTIMATE OF $6.9 BILLION AND MARKET EXPECTATIONS OF $8 BILLION。

TAKEN TOGETHER, THIS SET OF FIGURES SHOWS THAT DEMAND IS NOT CONFINED TO SINGLE PRODUCT LINES. THE HIGH-BANDWIDTH MEMORY REQUIREMENTS OF THE AI SERVER ARE THE DRIVING FORCE BEHIND THE PERFORMANCE OF THE LIGHT. THE TRADITIONAL DRAM AND NAND HAVE NOT SLOWED DOWN OVERALL PERFORMANCE, BUT TOGETHER THEY ARE ABOVE MODEL EXPECTATIONS。

The season of August is stronger, and the price of the market is rising

The market is more stimulating than the May season is the August season guidance. Officially, US$ 50 billion is expected to be collected in the fourth quarter of fiscal year 2026, and US$ 1 billion is floating up and down. The non-GAAP Māori rate is about 86 per cent, the non-GAAP EPS is 31.00 United States dollars, floating upwards and downwards 1.00 dollars。

THIS GUIDANCE IS SIGNIFICANTLY HIGHER THAN PREVIOUS MARKET EXPECTATIONS. BY CITIGROUP CALIBRE, THE AUGUST QUARTERLY COLLECTIONS ARE PROJECTED AT $50 BILLION, THE EPS AT $30.68 AND THE MĀORI RATE AT 85.7 PER CENT, ALL OF WHICH ARE HIGHER THAN PREVIOUSLY ESTIMATED AND CONSISTENT WITH THE BANK'S EXPECTATIONS。

FOR THE STORAGE INDUSTRY, PRICE INCREASES, CAPACITY DISCIPLINE AND STOCK LEVELS DETERMINE PROFIT ELASTICITY. IF THE AI SERVER CONTINUES TO ABSORB HBM AND HIGH-END DRAM SUPPLIES, MISANG HAS THE OPPORTUNITY TO KEEP THE 2027 PROFIT EXPECTATIONS HIGH。

HBM IS NOT AN ORDINARY MEMORY. IT BINDS DIRECTLY AI ACCELERATORS AND HIGH-END SERVERS, WITH LONG CUSTOMER CERTIFICATION CYCLES, STRONGER SUPPLY CHAIN RELATIONSHIPS, AND EASIER PRICE AND SUPPLY RHYTHMS TO LOCK IN LTAS. IF BEAUTY LIGHTS CAN CONTINUE TO INCREASE HBM DELIVERY, PRICE AND CUSTOMER COVERAGE, THE MARKET WILL NOT ONLY VALUE IT AS A TRADITIONAL STORAGE CYCLE UNIT。

AND BEHIND $1,200 IS THE HBM AND THE LONG LIST

THE TARGET PRICE OF CITICORP TO MIO $1,200 IS 10 TIMES THE 2027 EXPECTED EPS, WHICH IS SLIGHTLY HIGHER THAN THE HISTORICAL DRAM UPPER CYCLE VALUATION. THE VIABILITY OF THE PREMIUM DEPENDS ON WHETHER HBM PRICES CONTINUE TO RISE AND WHETHER LTAS INCREASE FUTURE REVENUE VISIBILITY。

LTAS ARE IMPORTANT IN THAT THEY REDUCE THE MOST COMMON UNCERTAINTIES IN THE STORAGE INDUSTRY. TRADITIONAL DRAM AND NAND PRICES ARE VULNERABLE TO SHORT-TERM SUPPLY AND DEMAND. ONCE CUSTOMERS GO TO STOCK, PRICES AND MĀORI RATES MAY DECLINE RAPIDLY. HOWEVER, IN THE AI SERVER CHAIN, HIGH-END MEMORY SUPPLY NEEDS TO BE LOCKED IN ADVANCE AND CLIENTS ARE MORE WILLING TO SIGN MULTI-YEAR ARRANGEMENTS TO ENSURE DELIVERY。

U.S. official has confirmed the existence of multi-year strategic client agreements and has disclosed strategic and supply arrangements with Anthropic. For Dell-related long-term supply agreements, as mentioned in Citigroup, the company or customer announcement should still prevail。

THIS TYPE OF AGREEMENT DOES NOT MEAN THAT THE PROFITS HAVE BEEN SETTLED. THE EXTENT TO WHICH THE AGREEMENT COVERS CAPACITY, HOW PRICE MECHANISMS ARE ADJUSTED AND WHETHER CLIENT CAPITAL EXPENDITURE CONTINUES TO GROW WILL AFFECT FINAL INCOME AND MĀORI RATES. PARTICULARLY IN THE AI INDUSTRIAL CHAIN, HBM PRICE INCREASES MAY ALSO BE CHALLENGED IF CLOUD MANUFACTURERS OR SERVER CLIENTS SLOW DOWN THE PROCUREMENT PACE。

A historical picture of beauty ratings and target prices. As can be seen, since 2025, the flag has increased its target price many times. In particular, after 2026, the target price was increased from $385, $430 and $510 per trip to $840 and further raised to $1,200 in June。

With more, the price is hard

THE KEY TO AMERICA'S ROTATION IS THAT AI NEEDS TO CONVINCE THE MARKET THAT STORAGE IS NOT JUST A TRADITIONAL CYCLE. BUT THE OLD PROBLEM DID NOT DISAPPEAR. THE STORAGE INDUSTRY IS MOST AFRAID OF THE SIMULTANEOUS EXPANSION OF PRODUCTION BY SUPPLIERS AND EVENTUALLY PUSHES THE PRICE INCREASE CYCLE TOWARDS STOCK ACCUMULATION。

IF DRAM OR NAND SUPPLIERS OVERLOAD AND CHANNEL STOCKS RISE, PRICE PRESSURES WILL SOON BE REFLECTED IN MĀORI RATES. IF COMPETITION INCREASES FASTER THAN AI DEMAND, AMERICA’S 2027 PROFIT ASSUMPTION WILL BE WEAKENED AND THE $1200 VALUATION PREMIUM AGAINST THE TARGET PRICE WILL BE HARDER TO SUSTAIN。

ANOTHER DISAGREEMENT IS HOW LONG AI CAPITAL SPENDING CAN LAST. THE CURRENT MARKET IS WILLING TO GIVE HBM A HIGHER PRICE BECAUSE OF STRONG DEMAND FOR AI SERVERS AND TIGHT SUPPLY OF HIGH-END MEMORY. HOWEVER, THE OPTIMISTIC EXPECTATION OF STORAGE NEEDS WILL ALSO COOL DOWN IF AI CHIPS ARE SHIPPED, SERVERS DEPLOYED OR CLOUD MANUFACTURERS INVEST AT A SLOWER PACE。

THE STRONG PERFORMANCE JUST HANDED OVER BY MEI-GOON PUSHED STOCK PRICES CLOSER TO THE TARGET PRICE AND LEFT PRESSURE TO THE LATER QUARTERS. THE AUGUST QUARTERLY GUIDELINES NEED TO BE FULFILLED, HBM PRICES NEED TO CONTINUE UNTIL 2027, AND LONG-TERM AGREEMENTS NEED TO BE TRULY TRANSLATED INTO STABLE INCOME. AS LONG AS COMPETITION INCREASES OVER DEMAND AGAIN, THE STORAGE INDUSTRY MAY STILL RETURN TO ITS OLD SCRIPT, WHICH IS DOWN-PRICED。