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Server demand expected to offset smartphone and PC weakness for memory supply chain
Monday, February 9, 2026 at 04:46 AM
Goldman Sachs analysis indicates that robust server demand is expected to absorb potential capacity surpluses even if smartphone and PC demand softens. Despite this, the firm downgraded Micron, suggesting that the upside for the memory supplier is already reflected in its current valuation.
Context
Goldman Sachs released a report detailing how robust server and AI demand is expected to insulate the memory supply chain from weakness in the smartphone and PC sectors. Modeling suggests that even in extreme "demand destruction" scenarios for consumer electronics, massive hyperscaler investment—projected to grow 50% in 2026—will absorb available capacity. This shift is already driving historic price spikes, with server DRAM contract prices forecasted to surge by nearly 90% in the first quarter of 2026.
Despite this industry-wide resilience, Goldman Sachs downgraded Micron ($MU) to Neutral while setting a $235 price target. Analysts cautioned that much of the positive sentiment surrounding the AI-driven recovery is already priced into the stock's valuation. While Micron remains a critical beneficiary of the transition to high-bandwidth memory, the firm believes current pricing fully reflects its growth prospects, marking a transition toward a more selective investment environment.
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