Samsung Electronics, SK hynix pare early losses; analysts say now is the time to raise semiconductor exposure

Samsung Electronics and SK hynix both fell in early trading Monday amid growing concerns about a slowdown in AI investment. Analysts said the selloff has pushed valuations well below what earnings forecasts justify, making this an opportune moment to increase exposure to the semiconductor sector.

According to Korea Exchange, the two chipmakers opened lower Monday, with Samsung Electronics starting at 210,500 won ($157) and SK hynix at 1.215 million won. By 9:45 a.m., losses had narrowed: Samsung Electronics was trading at 214,500 won, down 1,000 won, or 0.46 percent, from the previous session, while SK hynix was at 1.227 million won, off 45,000 won, or 3.54 percent.

Both stocks have been under sustained selling pressure recently as investors grow skeptical about whether big tech companies' heavy data center spending will translate into actual profits, weighing on the broader semiconductor sector alongside concerns over rising US interest rates.

Analysts at DS Investment Securities argued that underlying semiconductor demand remains solid despite the share price declines. In a report released Monday, the brokerage said the market has excessively priced in fears of a sector downturn after 2028.

"Now is the time to take advantage of the market's excessive pessimism and increase exposure," analyst Lee Su-rim wrote. "It is an overreaction to reflect in current share prices the concern that profits could plunge sharply after 2028, as they did in past cycles."

In fact, the capital expenditure outlook for major big tech companies is trending higher. Market research firm TrendForce raised its forecast for the 2027 capex growth rate of the world's nine largest cloud service providers to 60 percent on Wednesday, up from its earlier estimate of 50 percent. It also projected that AI server shipment growth would expand from 32.2 percent this year to about 36 percent next year.

A growing share of high-bandwidth memory in the product mix is another factor analysts expect to support earnings at both Samsung Electronics and SK hynix. DS Investment Securities forecast that even if DRAM prices fall, a higher proportion of premium products such as HBM will allow the two companies to sustain profit levels above those seen in previous downturns.

Under the brokerage's base scenario, even if DRAM average selling prices decline 20 percent in 2028, 10 percent in 2029 and 5 percent in 2030, operating profit at Samsung Electronics and SK hynix would fall only 7 to 12 percent and 12 to 18 percent, respectively, from their 2027 levels.

For the stocks to stage a meaningful recovery, analysts said financing concerns surrounding AI infrastructure companies would need to ease. "If credit risks among AI infrastructure firms stabilize and worries about rising US interest rates subside, domestic semiconductor valuations could recover on the strength of 2027 earnings forecasts alone," Lee said.