Top NAND Stocks Poised to Benefit from AI-Driven Demand Surge: Morgan Stanley

Investing.com -- The NAND flash memory market is on the cusp of a significant transformation driven by artificial intelligence, according to a recent Morgan Stanley report. The investment bank projects an incremental $29 billion total addressable market from AI inference by 2029, with industry shortages potentially emerging from the second half of 2026.

The surge in enterprise solid-state drive (eSSD) demand from hyperscalers has already begun to reshape market dynamics, with several companies positioned to capitalize on this trend. Here’s a look at the top NAND players according to Morgan Stanley’s analysis:

SanDisk: Elevated to Morgan Stanley’s Top Pick status with a raised price target of $96, SanDisk stands to benefit significantly from the recent strength in eSSD demand. Multiple hyperscalers have placed orders for tens of exabytes of NAND eSSDs, enough to impact the overall market expected to reach 250-300 exabytes in calendar 2025.

The company has already begun raising prices by 10% in channel and consumer markets, reflecting improved market conditions. While SanDisk needs to enhance its position in the eSSD segment, the transition to BiCS 8 technology could serve as a catalyst for market share gains.

In a recent update, Western Digital, which owns the SanDisk brand, reported strong fourth-quarter results with revenue of $2.61 billion, exceeding analyst expectations. Following the announcement, analysts at both Mizuho and Rosenblatt raised their price targets for the company.

KIOXIA: Morgan Stanley maintains an Overweight rating on KIOXIA Holdings while raising its price target from ¥2,900 to ¥3,900, based on a 7.2x multiple of FY3/27 EPS forecasts.

The company’s BiCS-8 technology combines planar shrinkage, new architecture (CBA), and multi-level cell technology to achieve higher memory density with lower capital expenditure requirements.

KIOXIA continues to enhance its QLC eSSD offerings, which could enable it to catch up with competitors like SK hynix. The firm’s FY3/27 operating profit forecast sits approximately 20% above consensus estimates.

Samsung Electronics: Despite being Morgan Stanley’s Top Pick in Korean tech, Samsung faces both opportunities and challenges in the NAND market. As the largest global NAND player with a 33% market share by revenue in 2Q25 estimates, Samsung has historically enjoyed higher margins than peers due to economies of scale.

However, its NAND exposure on eSSD has a relatively lower QLC mix compared to competitors. The company’s current valuation of 1.2x price-to-book looks attractive compared to its previous cycle peak of 1.6x, with potential upside from HBM market share gains, improving server DRAM demand, and better NAND economies of scale contributing to business growth. Still, analysts at Morgan Stanley continue to like the upside potential in Samsung stock with that sentiment now boosted by their latest NAND analysis.

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