Evercore ISI believes Western Digital’s higher capital spending over the next two years will primarily support growth in capacity per drive and storage capacity shipments, rather than a substantial increase in the number of hard drives. Under the firm’s assumptions, the payback period is about three years.
Morgan Stanley expects BIP’s FFO per unit to grow faster over the next three years than over the past three. European data center platform Data4 is a growth driver, but grid connections, customer contracts and asset sale prices will determine the pace of expansion.
Higher memory prices drove Samsung’s operating profit up 20% quarter on quarter in the third quarter of 2026. BofA raised its earnings forecasts for the following two years but cut its target price-to-earnings multiple from 9 times to 7 times. The bank sees SK Hynix as more attractive in the near term for DRAM growth and shareholder returns.
AI capital spending by four major technology companies continues to rise. Nomura calculates that their free cash flow in 2027 is highly sensitive to the pace of investment growth; meanwhile, the durability of memory makers’ earnings and their low valuations are reasons the bank favors the sector.
Amazon’s third-quarter capital expenditure doubled year over year, and management expects a further increase in 2027; AWS revenue exceeded Bloomberg consensus expectations, but a growing share of AI business and higher storage costs are adding pressure to margins.
US core inflation remains high, while investment and consumption support third-quarter growth. Nomura believes that after pausing rate hikes in October, the Fed will hike once more in December and hold rates steady throughout 2027.
Nomura has turned more bearish on the dollar amid weakness in US technology stocks and slowing inflows into securities; its highest-conviction trades are short USD/CNH and receiving Hong Kong short-term rates.
The company expects its AI and cloud business to grow by more than 70% in each of 2026 and 2027, but component shortages, data-center deployment delays and weak consumer electronics demand will affect the pace at which that growth materializes.
In the first quarter of fiscal 2027, Sandisk revenue rose 23% quarter over quarter, with data center business revenue up 61% but consumer business revenue down 29%. The company’s guidance for the next quarter also remained above market consensus.
Nomura raised its conviction in a short USD/CNH trade from 4/5 to 5/5, forecasting an exchange rate of 6.50 at year-end. Corporate foreign exchange conversion, year-end seasonality and the policy environment are its main grounds.
Overseas operations helped BYD return to year-on-year revenue growth in the third quarter, but both revenue and profit missed market expectations. Nomura has become more cautious on near-term demand and margins while maintaining its Buy rating.
Flex reported better-than-expected revenue and earnings for the quarter ended in September and raised its fiscal 2027 guidance. JPMorgan expects growth and margin improvement in the CPI business to continue into the next fiscal year, although separation costs are affecting cash flow conversion.
Revenue rose 9.7% year over year in the third quarter of 2026, but gross margin fell to 18.2%. Morgan Stanley believes rising depreciation and foundry costs, SiC substitution, and the timing of revenue from new products will constrain earnings recovery.
BofA favors Agnico Eagle’s assets and project pipeline, but both production and costs are trending toward the unfavorable ends of its full-year guidance; Eldorado faces a production downgrade, project delays and investment spending pressure.
Unusually active contract awards have increased shipbuilders’ backlogs. Citi says funded orders at Huntington Ingalls Industries and General Dynamics provide leading coverage of future revenue among the defense companies it follows.
Third-quarter revenue rose 31% year over year but missed expectations because of component shortages and inventory write-downs; BofA cut its earnings forecasts for the next three years and maintained its Buy rating.
Citi believes Republicans holding the Senate could push US stocks higher through year-end; a larger Democratic majority could lead markets to price in the risk of higher corporate taxes in 2028 earlier. Local elections could also affect the pace of data-center construction.
Capital spending by the major cloud and neocloud providers tracked by BofA is expected to rise 54% year over year in 2027, up from 37% before earnings season; demand for computing capacity and rental rates support expansion, while upfront investment continues to squeeze free cash flow.
Hon Hai’s collaboration with Nvidia is expanding from GPU servers to full racks, networking, power supply and cooling. Citi believes factory pre-integration and automation capabilities could expand its revenue opportunities from AI projects.
