Analyst Jukan: Storage and computing power will fluctuate in the same direction, local AI may meet the demand
Analyst Jukan published a discussion on the storage industry's cycle, believing that computing power and storage will tighten or loosen in sync, and that there will not be a situation where computing power is continuously in short supply while storage alone turns to surplus. He also stated that the logic of shorting storage while going long on hard drives does not hold, as hard drives are tied to the storage cycle; if this cycle declines, hard drives will struggle to remain secure on their own.Jukan noted that the market lacks a clear judgment on trends after 2027. Historically, prices often peak one to two quarters before supply increases, followed by an expansion in shipments and a contraction in profit pools. He believes that this cycle is different from those of personal computers, smartphones, and general-purpose servers, as the products used are not standardized, and the triggering factors are also different. Some investors who still view storage through the lens of past experiences of profits during upswings and losses during downswings dominate pricing, leading to a low valuation of storage. He stated that a sharp collapse similar to previous ones is unlikely to reoccur, but a gradual decline is possible; even if Samsung and SK Hynix's profit margins are halved from current levels, the price-to-earnings ratio may still be in the teens, about half of the valuation of hard drive companies.He also believes that when storage prices decline, other demands will absorb supply at various price levels, with local AI-driven personal AI demand expected to emerge. If the storage prices pushed up by hyperscale cloud providers cannot be controlled, local AI will struggle to spread. Referring to the transition from mainframes to personal computers and from cloud to smartphones, he anticipates that this AI cycle will shift from cutting-edge laboratories to local open-source AI, with the latter absorbing storage demand. He simultaneously stated that storage prices will not remain high for over ten years; prices will eventually decline, but new consumer demands driven by local AI and open-source initiatives may provide bottom support.