Why are the most popular Nasdaq stocks trading at the lowest P/E ratio?

Leading memory chip stocks on the Nasdaq are trading at exceptionally low forward P/E ratios (4–8) compared to the index's 21, despite surging profits and demand for AI chips. The concern: profits are at a cyclical peak, and expanding production could lead to market oversupply. However, demand for HBM chips and long-term agreements may change the picture.

The article examines the paradox of leading Nasdaq memory chip stocks: Samsung, Micron, SK Hynix, and SanDisk. Despite surging profits and unprecedented demand for AI chips, their stocks trade at exceptionally low forward P/E ratios (4–8 vs. 21 for the Nasdaq 100 index). The main explanation: fears that current profits are at a cyclical peak, and expanding production could lead to market oversupply and falling prices. However, the article notes unique features of the current cycle: demand for HBM chips for artificial intelligence, long-term agreements with customers, and Micron's assessment that tight supply conditions may persist beyond 2027. On the other hand, risks such as Chinese competition, massive investments, and a potential slowdown in cloud giants' spending could change the picture.