Samsung Electronics' record quarterly results have raised the question of whether the company's recently battered share price can regain upward momentum. For now, the market appears more sensitive to the industry outlook than to the earnings themselves. Shares surged immediately after the results were released Thursday morning, only to give back all of their gains and turn negative.
Securities firms are holding their buy ratings, saying fears of a semiconductor earnings peak are overblown. Even so, a combination of inflation, interest rate uncertainty, China-related risks and supply-demand pressures has prompted a string of target price cuts. Analysts say growth prospects remain intact, but share price upside may be limited for the time being.
Samsung Electronics opened Thursday up 2.64 percent at 214,000 won ($148) and briefly surged to 217,000 won before profit-taking selling pressure emerged, pushing the stock into negative territory.
The share price movement stands in stark contrast to the company's financial performance. Samsung Electronics disclosed Thursday that it posted sales of 171.5 trillion won and operating profit of 89.5 trillion won in the second quarter — setting all-time quarterly records for both metrics for the third consecutive quarter.
The Device Solutions division, which oversees the semiconductor business, was the primary driver, generating 89.2 trillion won in operating profit and accounting for roughly 99.7 percent of the company's total. Analysts attributed the strong performance to growing demand for AI memory chips and increased sales of high-value products.
Despite the record results, the share price has struggled to gain traction because market attention has already shifted from current earnings to what lies beyond next year. Concerns are mounting that profit growth could slow, driven by a potential softening in NAND prices, China's push to develop semiconductor equipment domestically and uncertainty surrounding US monetary policy.
Supply-demand dynamics add another layer of risk. Analysts note that the 200,000-won level — where retail investor buying has been concentrated recently — is seen as a key psychological support. Should that level break, retail investors who bought in that range could face losses and begin selling, adding further downward pressure.
In response, securities firms have been cutting target prices for both Samsung Electronics and SK hynix to reflect external uncertainties including interest rates, inflation and China-related risks.
Mirae Asset Securities maintained its buy rating on Samsung Electronics but cut its target price by 33 percent, from 550,000 won to 370,000 won. The firm cited an expected decline in NAND contract prices on top of concerns over China's domestic development of lithography equipment, both of which it said have increased valuation pressure across the sector.
Still, some analysts view the recent share price decline as excessive at current levels. Mirae Asset Securities noted that the projected dividend yield for 2026, based on the current share price, exceeds 5 percent, significantly enhancing the stock's dividend appeal, and said a re-rating is possible if the earnings improvement trend continues.
"The share price decline looks excessive, but a target price adjustment was unavoidable," said Kim Young-geon, a researcher at Mirae Asset Securities. "The time has come to translate the improved profitability into shareholder value."
He added that if Samsung expands shareholder returns and presents a new vision during the gap before sustained growth is confirmed in the numbers, "it will be an opportunity to align the company's vision with investor expectations."
SK hynix, which reported its earnings Wednesday, faces a similar dynamic. Shinhan Investment cut its target price from 4.2 million won to 2.7 million won, while Kiwoom Securities lowered its target from 2.6 million won to 2.2 million won. NH Investment and Daishin Securities set their targets at 3.4 million won and 3.2 million won, respectively, and Samsung Securities trimmed its target from 3.5 million won to 3 million won.
Most firms kept their investment ratings at buy. While concerns about the memory chip industry outlook and valuation adjustments drove the target price cuts, analysts said the current share price has already priced in a significant portion of the negative factors and is in oversold territory. They added that the growth trajectory driven by expanding AI data center investment and rising HBM demand remains intact.
Some brokerages went further, viewing the selloff as a buying opportunity. Korea Investment & Securities raised its target price for SK hynix from 3.8 million won to 4.7 million won, arguing that the second-quarter earnings miss reflected a partial delay in shipment timing rather than any weakening in demand. The firm said DRAM price increases and growing AI memory demand are likely to resume driving earnings improvement from the third quarter onward.
th5@heraldcorp.com
