Key Takeaways:
SK Securities raised its price target on SK Hynix Inc. to KRW 3 million, projecting an 80.7% upside from its current price, citing sustained demand for AI memory chips and a re-evaluation of the sector's growth prospects.
"The recent rally in memory chip stocks stems from market recognition that the memory chip segment within AI-related stocks has been severely undervalued," SK Securities said in a note, highlighting a rebound in the price-to-earnings ratio.
The brokerage also increased its target for Samsung Electronics Co. to KRW 500,000 from KRW 400,000, suggesting a potential 83.5% gain from its last close of KRW 272,500. The upgrade is supported by strong memory chip prices in the second quarter of 2026 and an anticipated supply shortage that is expected to persist into the next year.
The move follows a period of intense foreign investment in South Korean chipmakers, with overseas investors buying over $2 billion of Kospi shares on Wednesday alone. The upgrades from SK Securities and Barclays signal growing confidence that the AI-driven rally has further to run, despite the Kospi already gaining 75% this year.
The bullish call from SK Securities adds to a chorus of positive analyst sentiment for the Korean semiconductor sector. Last week, Barclays raised its price targets on both SK Hynix and Samsung Electronics, citing an ongoing supply-demand imbalance in the memory market. Barclays expects SK Hynix to maintain its leadership in high-bandwidth memory (HBM), the chips at the heart of AI accelerators.
This enthusiasm has propelled the Kospi index up by 75% year-to-date, with both Samsung and SK Hynix more than doubling in value. However, some near-term risks are emerging. A potential strike by unionized Samsung workers between May 21 and June 7 has led Citi to trim its price target on the stock, citing concerns over rising labor costs and their potential impact on margins.
Despite these concerns, the long-term outlook for the memory chip market remains strong. Analysts at both SK Securities and Barclays expect the current supply shortage to continue into 2027, driven by the increasing memory content required for new data center architectures. This is expected to support upward revisions to earnings per share forecasts over the next 12 months.
The consistent price target upgrades suggest that analysts believe the market is still catching up to the intrinsic value of Korean chipmakers in the global AI supply chain. Investors will be closely watching the upcoming union negotiations at Samsung and the next set of quarterly earnings for signs of any deviation from the bullish script.
This article is for informational purposes only and does not constitute investment advice.
