Even as South Korea's benchmark Kospi index swings violently, securities firms are still ramping up their bets on Korean memory chip shares, wagering that the AI-driven memory rally still has substantial room to run.
The benchmark index has seen sharp fluctuations recently, with chip heavyweights Samsung Electronics and SK hynix at the center of the turbulence, as investors reassess the outlook for AI demand. Yet analysts have largely remained unmoved by the selloff.
Nomura Securities maintained its bullish call on memory chips in a research note published Monday, predicting that supply bottlenecks will persist at least through 2028, and named Samsung Electronics and SK hynix as its top picks. The brokerage reiterated its "buy" rating, setting a target price of 670,000 won (about $505) for Samsung Electronics and 4.7 million won for SK hynix. Compared with their current prices of roughly 220,000 won and 1.28 million won as of Wednesday, those targets imply upside of more than three times. Nomura believes the market has overreacted and that there is no need for excessive worry.
"The market underestimates the breadth of AI demand and the earnings uplift that strong demand can deliver across the entire supply chain," the note said. "Our investment thesis is built on the continued expansion of data centers and the memory demand that follows."
JPMorgan also stayed optimistic earlier this month, maintaining its overweight rating on Korean equities. The U.S. investment bank expects AI-related stocks to continue driving Asian markets higher next year, extending this year's rally.
Local Korean brokerages share the same view, arguing that steady AI demand is eroding the memory industry's traditional boom-and-bust cycle.
"The logic of memory demand in the AI era is different from the past," said SK Securities analyst Han Dong-hee. "Previously, memory demand was driven by mature industries like PCs and smartphones, making it highly cyclical. Now that AI has become a brand-new source of demand, the industry's sensitivity to the economic cycle has fallen sharply."
He pointed out that valuations are at extremely low levels: the 12-month forward price-to-earnings ratios of Samsung Electronics and SK hynix stand at about 3.5 times and 2.8 times, respectively, below where they traded during past industry downturns. He views the recent selloff as a buying opportunity rather than a sign of deteriorating fundamentals.
Mirae Asset Securities likewise maintained its overweight rating on the semiconductor sector, keeping its target prices unchanged at 400,000 won for Samsung Electronics and 3.1 million won for SK hynix.
"We continue to see extremely strong resilience in AI demand, with no signs of slowing," said Mirae Asset Securities analyst Kim Young-gun. "Investors should not be overly pessimistic and should place more confidence in the optimistic expectations for leading companies."
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