Samsung's "royal flush" performance ignites South Korean semiconductor's "revenge" rebound! Samsung and SK Hynix both skyrocket, sweeping away geopolitical uncertainties.

Against the backdrop of a temporary ceasefire agreement between the US and Iran, the demand for AI-driven storage chips continues to surge, boosting the stock prices of two South Korean semiconductor giants, Samsung Electronics (SSNLF.US) and SK Hynix on Wednesday. Samsung Electronics's strong preliminary performance announcement not only ignited a retaliatory rebound in the stock prices of both companies but also prompted several top brokerages to significantly raise their target prices, turning market sentiment extremely optimistic once again. According to the preliminary earnings guidance released by Samsung Electronics on Tuesday, its operating profit for the first quarter of 2026 is expected to reach approximately 57.2 trillion Korean won (about 39 billion US dollars), more than 8 times higher year-on-year. This is not only a historical high for Samsung Electronics itself but also sets a record for the highest quarterly profit of a Korean company. Revenue also saw a remarkable increase, growing by 68% year-on-year to 133 trillion Korean won. The optimistic sentiment for SK Hynix's first-quarter report is also on the rise. Based on FnGuide's market consensus, SK Hynix is expected to achieve an operating profit of 31.6 trillion Korean won for the quarter, with revenue of 46.6 trillion Korean won. This means that the combined operating profit of the two giants in the first quarter will approach or even exceed the 100 trillion Korean won mark. Analysts point out that the core driver behind the explosive performance increase comes from two aspects: the continuous high demand for High Bandwidth Memory (HBM) and data center AI chips, and the overall increase in storage chip prices. According to Future Asset Securities data, the average selling price (ASP) of DRAM in the first quarter surged by 62% compared to the previous quarter, while the NAND flash memory price also rose by 53%. The impressive performance has swept away the stock price haze caused by political concerns over GEO Group Inc. On Wednesday, Samsung Electronics, listed on the Seoul Stock Exchange, surged by over 7% to close at 21,050 Korean won. The positive outlook for performance has boosted the sentiment of the entire semiconductor sector, with SK Hynix's stock price also rising, soaring nearly 13% on the same day to reach 103,300 Korean won. This round of increase reflects the market's increasing confidence that as major technology companies increase their investments in data centers and advanced computing infrastructure, the global chip industry is entering a long-term supercycle led by AI. KB Securities analyst Kim Dong-won revealed that despite the significant increase in memory prices in the first quarter, major North American cloud service providers still prefer to sign long-term supply agreements lasting 3 to 5 years and are willing to pay large deposits to ensure stable supply. With tech giants like Amazon.com, Inc. (AMZN.US), Meta (META.US), and Microsoft Corporation (MSFT.US) seeing a 76% surge in AI capital expenditure this year, both Samsung and SK Hynix plan to significantly increase capital expenditure to expand HBM capacity. Samsung plans to invest at least 110 trillion Korean won for capital expenditure and research and development in 2026, setting a new record for the company; while SK Hynix, although not disclosing specific numbers, stated that they will "substantially increase" their investment from the 301.7 trillion Korean won in 2025. Profit expectations exploding, institutions consecutively raise target price Faced with the certainty of growth in performance, the South Korean securities industry quickly responded by significantly raising target prices. KB Securities raised Samsung Electronics' target price from 320,000 Korean won to 360,000 Korean won, predicting the company's operating profit for this year to reach 327 trillion Korean won and further increase to 488 trillion Korean won by 2027. This will make Samsung Electronics surpass NVIDIA Corporation (NVDA.US) and become the company with the highest global operating profit next year. Kim Dong-won of KB Securities said, "Samsung Electronics' operating profit has entered a rapid growth channel starting this quarter. Its current market value is approximately 830 billion US dollars, which is only 19% of NVIDIA Corporation's market value (4.3 trillion US dollars) and 57% of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US)'s market value (1.5 trillion US dollars), making its valuation very attractive." Daol Investment & Securities raised Samsung's target price from 290,000 Korean won to 350,000 Korean won. Korean Investment Securities set a target price of 330,000 Korean won, while Future Asset Securities and Hana Securities maintained theirs at 300,000 Korean won. Meritz Securities analyst Kim Sun-woo pointed out, "Apart from the absolute scale of performance itself, it is more important to realize that the storage cycle is just entering the 'middle cycle' stage. Historical experience shows that when price increases overlap with production expansion, profitability will explode between the fourth quarter of 2026 and the second quarter of 2027." Daishin Securities researcher Ryu Hyung-geun added, "The market will continue to witness explosive profit growth from Samsung Electronics. Reassessing the super cycle of storage semiconductors has become imperative." As for SK Hynix, Korean Investment Securities raised its full-year operating profit forecast by 28% to 216 trillion Korean won (about 146.55 billion US dollars), more than four times that of 2025. The institution's researcher Chae Min-suk raised its target price from 150,000 Korean won to 180,000 Korean won, stating, "The operating profit margin of DRAM is expected to jump by 10.4 percentage points compared to the previous quarter, reaching 75.4%. The recent stock price pullback due to tensions with GEO Group Inc provides a buying opportunity." Shinhan Investment Securities also raised its target price from 130,000 Korean won to 150,000 Korean won. Researcher Kim Hyeong-tae said, "It is expected that SK Hynix's first-quarter revenue will reach 50 trillion Korean won, and operating profit will exceed 35 trillion Korean won. With the backdrop of demand-driven price increases, profitability is expected to increase significantly throughout the year, continuously setting record performances." He added, "The price increase trends for DRAM and NAND are stronger than expected. The upward trend in prices for all storage products is accelerating the improvement in profitability, with record-breaking performances expected every quarter." SK Hynix is the world's second-largest memory chip manufacturer, behind only Samsung Electronics, and both companies are expected to announce their official financial reports later this month.