Citi expects shortages across the global memory semiconductor market to deepen through 2031, driven by increasing demand for high-bandwidth memory (HBM), DRAM and NAND as artificial intelligence systems adopt continual learning.
In a research note published Monday, the investment bank identified continual learning as a potential central theme in AI development over the next five years. The approach involves updating AI models with new tasks and information while retaining access to previously acquired knowledge, creating demand for both memory and data storage.
Citi forecasts HBM bit demand will increase 62% year over year to 75.2 billion gigabits in 2027, followed by a further 69% rise to 127.0 billion gigabits in 2028.
The bank also expects demand for enterprise solid-state drives (eSSDs) to expand as AI systems require additional storage capacity to retain previously learned information.
For DRAM, Citi projects global demand growth of 30% in 2027 and 35% in 2028, reflecting the anticipated impact of continual learning on server DDR5 and HBM requirements.
Supply growth is forecast at 19% in 2027 and 22% in 2028, below the projected increases in demand. Citi estimates DRAM supply-demand ratios of -8.7% and -9.7% for the respective years, indicating a widening shortfall.
The bank anticipates a similar imbalance in NAND memory, forecasting demand growth of 29% in 2027 and 33% in 2028, compared with supply increases of 21% and 25%.
Citi projects NAND supply-demand ratios of -6.1% in 2027 and -5.5% in 2028, compared with an estimated -0.8% in 2026.
In its equity research, Citi identified Samsung Electronics (USOTC:SSNHZ), SK Hynix (NASDAQ:SKHY), Micron (NASDAQ:MU), Sandisk (NASDAQ:SNDK) and Kioxia (USOTC:KXIAY) as its preferred memory semiconductor stocks.
Within semiconductor equipment and materials, the bank highlighted Montage (USOTC:MNTCF), Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX), TES, Eugene Tech and TechWing.
The projections reflect Citi’s expectation that AI-related memory consumption will grow faster than available supply, with the resulting market imbalance potentially extending through 2031.