Analyst Predicts Synchronization of Storage and Computing Power Trends

Analyst Jukan has provided insights into the cyclical nature of the storage industry, asserting that fluctuations in computing power and storage capacity will occur in tandem. He argues that it is unlikely for computing power to face a persistent shortage while storage levels become excessive. Jukan emphasizes that the strategy of shorting storage while investing in hard drives is flawed, as the performance of hard drives is closely linked to the overall storage cycle.

He highlights the current market's uncertainty regarding trends beyond 2027, noting that historically, prices tend to peak one to two quarters prior to an increase in supply, leading to a rise in shipments and a subsequent contraction in profit margins. Jukan points out that this cycle differs from those seen in personal computers and smartphones due to the non-standardized nature of the products involved and varying triggering factors. He suggests that many investors continue to base their expectations on past profit patterns, resulting in undervaluation of storage assets.

Jukan predicts that while a sharp collapse similar to previous downturns is unlikely, a gradual decline in prices is more feasible. He notes that even if profit margins for major players like Samsung and SK Hynix are halved, their price-to-earnings ratios may still remain competitive. He also anticipates that as storage prices decrease, new demands, particularly from local AI initiatives, will emerge to absorb the supply. Jukan believes that the transition from advanced AI technologies to local open-source AI will drive this demand, providing a potential support for storage prices in the long term.

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Source: KLEA News