AI Storage Demand Elasticity May Rewrite Cycles, Capacity Expansion Not Necessarily Leading to Profit Plunge

Citrine analysis suggests AI's high demand elasticity could offset 2028 supply expansion impacts, potentially stabilizing margins and challenging traditional cyclical valuation models for storage manufacturers.

Woofun AI notes that Citrini analyst Jukan argues the recent storage chip pullback reflects early pricing of 2028 supply expansion expectations rather than mere deleveraging. While HBM tightness is expected until 2027, Samsung and SK Hynix expansions may ease the gap by 2028, prompting markets to anticipate price declines ahead of historical norms.

The analysis highlights that AI demand exhibits a price elasticity of 1.42, meaning a 1% price drop increases demand by 1.42%. This convex growth in token consumption could stabilize revenues despite price cuts, narrowing profit declines compared to traditional cycles and potentially invalidating standard low P/E valuations for storage makers..