Fueled by the artificial intelligence (AI) investment boom, the stock prices of Samsung Electronics(005930) and SK hynix(000660), which had surged since last year, fell sharply this month, lowering expectations in the securities industry. Some brokerages downgraded their investment opinions and earnings outlooks for the two stocks.
According to the Korea Exchange (KRX) on the 14th, the stock price increases over the past year reached 290% for Samsung Electronics and 610% for SK hynix. However, from the 1st to the 14th of this month, Samsung Electronics and SK hynix fell 21.26% and 27.81%, respectively.
As the two rapidly rising stocks turned downward, the previously optimistic mood across the securities industry also appears to be changing.
BNK Investment & Securities on the 8th set a target price of 1.85 million won for SK hynix. Considering the share price was around 2 million won at the time, it effectively warned of a decline. BNK Investment & Securities also lowered its investment opinion on SK hynix to "neutral."
Lee Min-hee, an analyst at BNK Investment & Securities, said in a report, "The competitive infrastructure investments by hyperscalers that place orders are no longer valid," adding, "Momentum is slowing."
Kiwoom Securities recently cut Samsung Electronics' target price by 9.30% to 390,000 won from 430,000 won. With semiconductor prices rising, price increases for finished goods such as PCs and smartphones are gaining momentum, and the firm said this could lead to reduced memory purchases.
There was also a warning that while earnings at Samsung Electronics and SK hynix will keep improving, it will be hard to sustain "earnings surprises" that far exceed investors' expectations. Mirae Asset Securities cut its estimate for SK hynix's second-quarter operating profit by 12% to 6.23 trillion won from 7.07 trillion won, and Hyundai Motor Securities likewise projected SK hynix's second-quarter revenue and operating profit to fall short of its previous forecasts by 3.1% and 1.6%, respectively.
Noh Geun-chang, an analyst at Hyundai Motor Securities, said, "We expect DRAM bit growth (increase in memory supply converted to bits) to miss previous expectations, so revenue and operating profit are also expected to come in below prior forecasts."
Korea Investment & Securities Co. also projected that SK hynix's second-quarter results will miss consensus by about 8%. Chae Min-sook, an analyst at Korea Investment & Securities Co., said this is "because SK hynix has a higher sales mix of high bandwidth memory (HBM) than competitors, leading to a lower average selling price (ASP) growth rate than the market average."
However, experts said it is problematic to interpret the recent reset in market expectations as a semiconductor "peak-out." They said the momentum for earnings improvement and the resulting share price gains will continue.
Han Dong-hee, an analyst at SK Securities, said, "The semiconductor supply shortage will continue even in 2027, and demand remains strong," adding, "We are not even at the stage to discuss inventory build-up."
Han said, "A mere slowdown in the pace of price increases does not allow us to apply the old-cycle logic of a sharp price drop," adding, "A slowdown in the rate of increase and a reversal in the direction of prices are entirely different issues."