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Mirae Asset Raises SK Hynix TP to KRW3.8 million; KB Securities Says Rally Still Midway; Wedbush: Market Underestimates Memory Supercycle
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Driven by two heavyweight stocks, Samsung Electronics and SK Hynix, South Korea's KOSPI index once surged 5.1% intraday today (27th) to a record high of 8,457 points, before closing up 181 points or 2.3% at 8,228. Although SK Hynix has climbed more than 250% year to date, analysts believe the AI-driven rally is not over. Mirae Asset raised its TP on SK Hynix by 19% from KRW3.2 million to KRW3.8 million. Peter Kim, Global Investment Strategist at KB Securities, said the fundamentals and valuations of the two heavyweight stocks remain very solid. He added that Micron Technology, Inc. (MU.US), a US memory giant, is trading at around 12x price-to-earnings, while SK Hynix and Samsung are valued at about 6x to 7x. Looking at share prices alongside valuation fundamentals, he said the remarkable rally is not yet halfway through. CNBC also cited a report by Wedbush analyst Dan Ives, who described the current AI boom as only being in the "third inning of a nine-inning game." He wrote that the AI revolution is advancing at full speed, adding that demand for HBM, DRAM and NAND memory has reached "unprecedented levels." Ives said SK Hynix is a core beneficiary of this memory supercycle and one of the most important AI plays in the market today, as investors are still significantly underestimating the duration and magnitude of the cycle. Capital expenditure by major technology companies is expected to reach approximately USD725 billion. However, some investors are uneasy about mounting concentration risk in the South Korean equity market. More than a dozen 2x leveraged products linked to Samsung and SK Hynix were listed in South Korea today (27th), potentially exacerbating market volatility. Kim noted that the market has become "highly polarized," with a handful of AI-related stocks exerting outsized influence on benchmark index performance. Despite concerns, he believes the key risk that typically ends semiconductor upcycles is unlikely to emerge in the near term. Ultimately, excess capacity is what breaks such cycles, but capacity expansion takes years to materialize, suggesting the current rally is only about halfway through. Bloomberg cited Cha So-Yoon, Securities Investment Manager at Taurus Asset Management, as saying that profitability alone makes it difficult to estimate a near-term peak for SK Hynix. Even if investors do not apply a 20x valuation multiple used for large technology stocks, many are modeling 10x, implying substantial upside potential. Barclays earlier this month also highlighted a potential US listing by SK Hynix as a catalyst. The bank expects the company to continue benefiting from pricing power amid tight supply and to maintain its leadership in the HBM segment. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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