Fueled by soaring demand for AI-driven memory chips and against the backdrop of a provisional US-Iran ceasefire agreement, shares of South Korea's two semiconductor giants, Samsung Electronics Co., Ltd. and SK Hynix, surged significantly on Wednesday. The powerful preliminary earnings reported by Samsung Electronics not only triggered a sharp rebound in both companies' stock prices but also prompted several major brokerages to substantially raise their target prices, shifting market sentiment back to extreme optimism.
According to Samsung's preliminary guidance released on Tuesday, its operating profit for the first quarter of 2026 is projected to reach approximately 57.2 trillion won (around $390 billion), a staggering increase of more than eightfold year-over-year. This figure not only sets a new record high for Samsung itself but is also expected to be the highest quarterly profit ever recorded by a South Korean company. Revenue was equally impressive, jumping 68% year-over-year to 133 trillion won.
Market optimism is similarly high for SK Hynix's first-quarter results. Based on the FnGuide market consensus, SK Hynix's quarterly operating profit is anticipated to reach 31.6 trillion won, with revenue of 46.6 trillion won. This suggests that the combined operating profit of the two giants for the quarter could approach, or even surpass, the 100 trillion won mark.
Analysts point to two core drivers behind the explosive profit growth: firstly, persistently high demand for High Bandwidth Memory (HBM) and data center AI chips, which continues to outstrip supply; and secondly, a broad-based increase in memory chip prices. Data from Mirae Asset Securities indicates that the average selling price (ASP) for DRAM surged 62% quarter-over-quarter in Q1, while NAND flash prices also climbed 53%.
The stellar earnings have dispelled the gloom that had previously weighed on stock prices due to geopolitical concerns. On Wednesday, shares of Samsung Electronics, listed in Seoul, surged over 7%, closing at 1,050,000 won. The optimistic earnings outlook buoyed sentiment across the entire semiconductor sector, with shares of SK Hynix also moving higher, skyrocketing nearly 13% on the day to reach 10,330,000 won.
This rally reflects growing market conviction that the global chip industry is entering a long-term, AI-driven super-cycle, as major technology companies ramp up investments in data centers and advanced computing infrastructure. An analyst from KB Securities revealed that despite the significant price increases for memory in the first quarter, major North American cloud service providers are inclined to sign long-term supply agreements lasting three to five years and are willing to pay substantial deposits to secure stable supplies.
With AI capital expenditure from tech giants like Amazon, Meta, and Microsoft soaring 76% this year, both Samsung and SK Hynix plan to significantly increase capital expenditures to expand HBM production capacity. Samsung intends to invest at least 110 trillion won in capital expenditure and R&D by 2026, which would be a record high for the company. While SK Hynix has not disclosed specific figures, it stated it would "significantly increase" investments from the 2025 base of 30.17 trillion won.
Faced with this certain profit growth, the South Korean securities industry reacted swiftly, with many institutions substantially raising their target prices. KB Securities raised its target price for Samsung Electronics from 1.6 million won to 1.8 million won, forecasting the company's operating profit to reach 327 trillion won this year and further increase to 488 trillion won by 2027. This would position Samsung to surpass Nvidia and become the company with the highest global operating profit next year.
The KB Securities analyst noted, "Samsung Electronics' operating profit has entered a rapid upward trajectory starting this quarter. Its current market capitalization is approximately $830 billion, which is only 19% of Nvidia's ($4.3 trillion) and 57% of TSMC's ($1.5 trillion), making its valuation highly attractive." Daol Investment & Securities raised its Samsung target from 1.45 million won to 1.75 million won. Korea Investment & Securities set a target price of 1.65 million won, while Mirae Asset Securities and Hana Securities maintained their targets at 1.5 million won.
A researcher from Meritz Securities pointed out, "Beyond the sheer scale of the earnings themselves, it is more important to recognize that the memory cycle is just entering its 'mid-cycle' phase. Historical patterns suggest that when price increases coincide with capacity expansion, profits will explode between the fourth quarter of 2026 and the second quarter of 2027." A researcher from Daishin Securities added, "The market will continue to witness explosive profit growth from Samsung Electronics. A reassessment of the memory semiconductor super-cycle is now imperative."
Regarding SK Hynix, Korea Investment & Securities on Wednesday raised its full-year operating profit forecast by 28% to 216 trillion won (approximately $146.55 billion), more than four times the 2025 figure. The institution's researcher raised the target price from 7.5 million won to 9 million won, stating, "The DRAM operating profit margin is expected to jump 10.4 percentage points quarter-over-quarter to 75.4%. The recent stock price correction due to geopolitical tensions actually presents a buying opportunity." Shinhan Securities also raised its target price from 6.5 million won to 7.5 million won.
A researcher from Shinhan commented, "SK Hynix's first-quarter revenue is projected to reach 50 trillion won, with operating profit exceeding 35 trillion won. Against the backdrop of demand-driven price increases, full-year profits are expected to grow significantly, setting new records quarter after quarter." He added, "The upward trend in DRAM and NAND prices is stronger than expected. The price increases across all memory products are accelerating profitability improvements, and record-breaking quarterly results are anticipated."
SK Hynix is the world's second-largest memory chip maker, after Samsung Electronics. Both companies are expected to release their official earnings reports later this month.
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