Global OEMs: Would Higher Inventories Lead to +ve Profit Surprise?

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Global OEMs: Would Higher Inventories Lead to +ve Profit Surprise?

o profit from higher memory prices by pricing its servers using memory prices in the 40%30% 27% 26% 26% 24%

current quarter. However, it is also possible that it has sold memory directly, or a combination 20%10%

of both. We believe such a possibility could apply to OEMs globally that have the capabilities to 0% Dell ASUS Lenovo Super Micro Cisco HPE Xiaomi Industry Total

access memory supply in the past 6-9 months and built inventories. For OEMs that are more .Source: Company data, Jefferies

Industry Total=Lenovo+Cisco+HPE+Super Micro+Asus

consumer focused, it is harder for them to reflect market prices of memory in their products, +Xiaomi+Dell

hence perhaps more tempting to sell some in the market, given 2Q26 memory prices likely

rose 70%-100% QoQ. This could potentially create positive earnings surprises for 2Q26 for this Chart60% 5 - Raw Materials Inv QoQ Growth 4Q25

group of stocks, although such a surge in profit would be one-off in nature. 50% 46%

40%

26% 27% 26% 26%Who has built the most raw materials inventories in the past 6 months? Among the 13 30%

20% 19% 16% 15%

OEMs we track, only 7 report quarterly raw materials inventories. According to YoY and QoQ 10%

0%growth in 1Q26 and 4Q25, we found that Dell, ASUS and Lenovo have seen the biggest increase Dell Super Micro Xiaomi ASUS HPE Lenovo Cisco Industry Total

in raw materials inventories, followed by Xiaomi and Super Micro. The 1Q26 raw materials .Source: Company data, Jefferies

inventories of Dell, ASUS, Lenovo and Xiaomi were at US$10.6bn, US$3.9bn, US$7bn and +Xiaomi+Dell

US$3.8bn, respectively. In total, these four OEMs have increased their 1Q26 raw materials

Chart 6 - Inventory Turnover

inventories by ~US$12bn vs 1Q25.