Citrini Analyst: AI Demand Elasticity Could Reshape Storage Cycles, Prevent Profit Collapse in 2028 Supply Ramp

According to Citrini analyst Jukan on July 18, AI demand elasticity could fundamentally alter the traditional storage chip cycle. The analyst argues that when storage prices fall, AI-driven demand may grow faster than price declines, potentially mitigating profit compression compared to historical cycles.

The analysis cites a 2026 paper noting AI token demand has price elasticity of approximately 1.42, meaning each 1% price drop could trigger 1.42% demand growth. In a historical scenario, a 30% DRAM price cut would slash profits sharply—Samsung's 2019 operating profit fell 52.8% year-over-year. However, if AI-driven demand increases ~42% while manufacturing costs decline 15%, revenue could stabilize and profit decline narrow to approximately 15%, potentially reshaping valuation multiples for storage makers.