Brokerages are lowering their target prices one after another for the leading stocks that had driven the domestic market, centered on semiconductors. As target price downgrade reports spread from Samsung Electronics(005930) and SK hynix to Hyundai Motor, voices are growing that, while results remain solid, the market's heightened expectations need to be adjusted.
According to the financial investment industry on the 10th, starting this week, target price downgrade reports have come out in succession for large-cap stocks such as Samsung Electronics, SK hynix(000660), and Hyundai Motor. Common factors reflected include concerns about a peak-out in the semiconductor cycle, expectations already priced in after a short-term surge, and the possibility of a slowdown in the growth rate of earnings.
Share prices are also on a decline. According to the Korea Exchange (KRX), Samsung Electronics and SK hynix have fallen 14.7% and 17.7%, respectively, so far this month through today. Samsung Electronics fell from 334,000 won last month to 285,000 won, and SK hynix dropped from 2,650,000 won to 2,180,000 won. The combined market capitalization of the two companies also decreased by about 623 trillion won, from 3,842 trillion won at the end of last month to 3,219 trillion won.
The most conservative view came from BNK Investment & Securities. On the 8th, BNK Investment & Securities set a target price of 1,850,000 won for SK hynix with a "hold" rating. This is below both the share price at the time the report was written and the current share price, effectively close to a sell view.
BNK Investment & Securities assessed that the capital expenditures (CAPEX) of global big tech companies that have led expanded AI infrastructure investment may be hard to sustain at the market's expected pace. It cited the possibility that cloud service providers (CSPs) such as Meta could slow investment and the expansion of supply by Chinese memory makers as key variables for the semiconductor cycle.
Lee Min-hee, an analyst at BNK Investment & Securities, said, "DRAM for AI servers and enterprise solid-state drives (eSSD) are still in a supply shortage situation," but added, "the competitive infrastructure investments by hyperscalers that place orders are no longer valid."
Lee added, "The current consensus for this year's capital expenditures (CAPEX) by U.S. CSPs is up 83%, and next year up 23%," and analyzed, "Considering expectations of higher memory and central processing unit (CPU) prices next year and the specification upgrades of new agent AI models, CAPEX would need to increase at least 30% to 40% next year as well, but the likelihood of moderating the investment pace is rising, which diverges from the current performance outlooks of semiconductor corporations."
Target price cuts also came for Samsung Electronics. On the 8th, Kiwoom Securities lowered its target price from 390,000 won to 430,000 won. This is the second time this year, after March, that a domestic securities firm has lowered its target price for Samsung Electronics.
Kiwoom Securities said second-quarter results should meet market expectations, but from the second half, a slowdown in the earnings per share (EPS) growth rate, an easing of the uptrend in memory prices, and intensified competition with Chinese memory makers will appear simultaneously, expanding share price volatility.
Park Yuak, an analyst at Kiwoom Securities, said, "In the second half, as the EPS growth rate slows, expectations for expanding market share in next-generation high bandwidth memory (HBM4) and enterprise SSD (eSSD) and concerns about intensified competition with Chinese memory makers will act simultaneously, expanding share price volatility," adding, "We lowered the target price to reflect adjustments to long-term memory forecasts."
The target price downgrades were not limited to semiconductors. Hyundai Motor(005380), which had surged recently on Robotics and physical AI expectations, is also seeing brokerages lower their sights. This week (July 6–10), among the 11 brokerages that issued reports on Hyundai Motor, only DS Investment & Securities raised its target price, while five—Shinhan, Eugene, Kiwoom, LS, and Daol Investment & Securities—lowered theirs.
Eugene Investment & Securities forecast Hyundai Motor's second-quarter operating profit at 3.1 trillion won, down 14.4% from a year earlier and slightly below market expectations. It analyzed that sluggish sales, a gap in new models, parts supply disruptions, and reduced exports to the Middle East weighed on earnings.
Lee Jae-il, an analyst at Eugene Investment & Securities, said, "After the share price surged on humanoid robot momentum, short-term profit-taking emerged, and second-quarter earnings weakness and overly high expectations for AI were also largely priced in," adding, "The recent share price decline is not a matter of fundamentals but a process of adjusting expectations."
Lee added, "With the launch of the new Avante and Tucson in the second half, the gap in new models will be filled, and the effects of new models such as the Grandeur hybrid and Ioniq 3 will add to momentum," adding, "Second-quarter earnings weakness could instead be a buying opportunity."