Source: BIT Securities

Since entering August, the "fear index" VIX of the U.S. stock market has been on a decline, gradually falling from around 20 to 15, and even hitting 14.2 during trading yesterday. Against the backdrop of low volatility, the S&P 500 has accumulated a rise of about 16% this year, equity funds have seen net inflows for 12 consecutive weeks, and the U.S. stock market has risen for three weeks in a row, repeatedly setting new historical highs.

Everything seems tranquil. Yet it is precisely at such moments that alarms begin to sound for some Wall Street institutions.

1. What alarms has VIX triggered?

Wall Street institutions generally view the period from mid-August to mid-October as a historical period of market turbulence.

Investment firm BTIG's statistical model gives a specific figure: in every midterm election year since 1990, the equal-weighted S&P 500 index experiences at least a 7% pullback from the average peak on August 18 to mid-October—without exception.

The implication of this pattern is straightforward: we are entering the worst period in the midterm election year calendar, so don’t get too complacent. Especially with volatility currently at a very low level, the market is likely underestimating the fragility of this rally when faced with sudden negative news. The flatter the spring is pressed, the more violently it will bounce back.

2. In a peaceful atmosphere, storage stocks regained the limelight

Interestingly, on the night when VIX was stable, the storage chip sector saw a broad rally, reclaiming market attention: SK Hynix rose about 3%, SanDisk nearly 9%, and Micron over 4%.

In a low-volatility market, capital seems to have reached a tacit agreement—storage is currently the only sector expected to continue to strengthen.

3. Three cards in the hands of storage bulls

Why can storage still rise? Breaking it down, there are three layers of logic.

First, price increases have not only not stopped but are accelerating. Guidance from U.S. investment bank KeyBanc shows that DRAM prices will rise by 15% to 20% in Q3 and by another 15% in Q4; NAND prices will surge by 30% to 40% in Q3. Note that this is not a short-term pulse caused by downstream manufacturers stockpiling, but rather a structural shortage: HBM and advanced DRAM have consumed a large amount of original manufacturers' production capacity, while ordinary DRAM and NAND production lines have been crowded out and can only passively lack supply.

Second, the supply side is surprisingly restrained. Storage manufacturers hold a large number of long-term contracts, essentially locking in the procurement volumes and prices with customers for the next year or two. Micron has the highest coverage in this regard. With long contracts in hand, no one has the motivation to suddenly expand production or lower prices to compete for business. U.S. Bank has even stated: AI has permanently rewritten Micron's cyclical stock attributes, projecting an EPS of $236 by 2030, with a gross margin of about 80%.

Third, long-term logic carries endorsement from the companies themselves. SanDisk recently pledged during its Investor Day to maintain a revenue growth rate of mid-single digits to 15% in FY2028 to FY2030; it also jointly released the ninth-generation 2Tb QLC flash memory with Kioxia—QLC is a storage technology capable of holding more data in the same area, low-cost and high-capacity, aimed directly at the AI data center storage. This effectively announces its intention to capture the territory of mechanical hard drives (HDD) in data centers.

4. Where are the risk points hidden?

While the bullish logic makes sense, the risks cannot be ignored.

First, Chinese supply. ChangXin Storage once held the position of the highest-valued company in China, with HP, Acer, and Asus, among others, already introducing its products in small batches; Yangtze Memory's NAND shipments have entered the global top three. Chinese manufacturers have not yet penetrated the high-end market, but their strategy could involve starting from low-end models and progressively pushing down prices—this is a Damocles' sword hanging over all storage manufacturers.

Second, the psychological trap of cyclical stocks—when prices rise, no one believes they will fall. Micron's stock price fell 23% from a high point without any new earnings report being released; Kioxia was even harsher, dropping 48% before bouncing back. Now the market itself is debating: Is this rally the last push before a peak, or a mid-mountain rotation? No one can provide a definitive answer ahead of time.

Third, the demand eggs are all in the AI basket. The "off-balance sheet AI commitments" of the nine major tech companies—signed outside the balance sheet and not yet turned into actual AI procurement and investment expenses—approach $3 trillion. The demand looks huge, but once the giants enter a "digestion period,” meaning they pause new orders and first use up the existing computing power, storage demand will be the first to experience a gap. Even more concerning is that investment bank Bernstein has raised its WFE spending expectations for the next two years by 75%—WFE is the wafer fab equipment spending, which can be understood as the money storage manufacturers spend on machines and building new production lines. A significant increase in equipment orders means the seeds of the next round of overcapacity are already sown.

5. In conclusion: Short to medium-term trends remain, but the time for blind buying is over

After laying out both sides of the argument, the conclusion becomes clear: In the short to medium term, the storage sector is likely to maintain a bullish trend, and the price increase trend is expected to continue at least until 2027. But it must also be clearly stated—that at this position, this is no longer a phase where one can blindly buy and profit.

Ordinary investors need to closely monitor these several signals:

First is the month-on-month slope of the NAND contract price, that is, how much the contract price rises each month compared to the previous month; if the growth rate slows down or even flattens, it indicates that the shortage logic is loosening; second is the long contract coverage rate of original manufacturers; if the proportion of long contracts begins to decline, it suggests that manufacturers themselves are not so certain about the future; third is the progress of high-end Chinese memory introductions; once ChangXin and others break into the high-end market, the pricing system will be reshuffled.

Whichever of these three signals turns first will represent the top of the current rally.

【Important Notice】This article is written and provided by an external contributor. The market data, institutional forecasts, and historical statistical patterns mentioned herein are for reference only and do not constitute investment advice, offers, or invitations to offer, nor do they represent a recommendation for the buying or selling of related securities. The opinions, analyses, and judgments expressed in this article represent the personal views of the author and do not reflect the official stance of BIT or BIT Research. BIT does not guarantee the accuracy, completeness, or timeliness of the content. The third-party viewpoints cited in this article (including KeyBanc, U.S. Bank, Bernstein, BTIG, etc.) only represent their own or analyst personal opinions and do not reflect BIT's position, nor guarantee accuracy. Historical patterns and past performance do not guarantee future results, and there is significant uncertainty in long-term profit forecasts. Investment involves risks of principal loss, particularly in the storage chip industry, which is highly cyclical, and market prices may fluctuate significantly. Investors should make decisions based on their own financial situation and risk tolerance and consult independent professional advisors.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。