Battery Stocks Rebound as AI-Driven ESS Expectations Lift Shares

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[Financial News] Shares in the rechargeable battery sector are rebounding as expectations grow for ESS demand driven by expanded investment in artificial intelligence (AI) infrastructure, while the market also sees earnings as having bottomed out. Despite weak first-quarter results, investors appear to have already priced in hopes that the industry has passed its low point, drawing in institutional and foreign buying.
According to the Korea Exchange (KRX) on the 5th, LG Energy Solution's share price rose 13.1% last month, from 407,000 won to 460,500 won. Samsung SDI Co., Ltd. (Samsung SDI) surged 60.9% over the same period, from 432,000 won to 695,000 won, while SK Innovation Co., Ltd. climbed 27.7% from 114,500 won to 146,200 won.
Institutional and foreign investors drove the rebound. They bought a net 254.6 billion won and 124.2 billion won worth of LG Energy Solution shares, respectively. Samsung SDI also saw net purchases of 776.4 billion won from institutions and 474.9 billion won from foreign investors. SK Innovation attracted 353.1 billion won from foreign investors and 152.4 billion won from institutions. By contrast, individual investors were net sellers in most major names, including net sales of 1.2157 trillion won in Samsung SDI alone, as they locked in profits.
The stock rebound is being interpreted as a sign that earnings were not damaged as severely as the consensus had feared.
Although both LG Energy Solution and Samsung SDI posted losses in the first quarter, Samsung SDI's loss narrowed more than the market had expected, beating consensus and strengthening hopes that the industry has passed its trough. LG Energy Solution's operating loss was wider than expected, but revenue came in above consensus, reinforcing the view that earnings have bottomed out.
The expansion of AI infrastructure investment is also seen as a positive factor. As demand rises for ESS and Battery Backup Units (BBUs) to meet growing data center power needs, analysts say a new growth story is taking shape across the rechargeable battery sector.
Brokerages expect the rechargeable battery industry to move past the slowdown in electric vehicle (EV) demand and enter a gradual recovery phase. In particular, they say the shift in demand toward ESS is laying the groundwork for earnings improvement. However, the pace of recovery in EV demand will likely limit the strength of the broader industry rebound, making company-specific differentiation unavoidable in the near term.
Noh Woo-ho, a researcher at Meritz Securities, said, "Unlike last year, when investment sentiment was split between EVs and ESS amid policy volatility, this year ESS is expected to make a larger contribution to earnings, which could help lift plant utilization rates. As the energy transition accelerates, there is also room for a rebound in EV sales in North America and Europe. The domestic battery value chain is also opening up demand opportunities beyond EVs and ESS, including defense, so the upside factors are clear."
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koreanbae@fnnews.com Bae Hangeul Reporter