"Semiconductor Stocks Plunged, Yet 4.2 Million Won for Hynix?" Why KB Securities Raised Its SK hynix Target Price Again

[Financial News] A brokerage report has raised SK hynix's target price to 4.2 million won, forecasting stronger memory demand ahead despite the sharp drop the previous day.
On the 3rd, KB Securities raised its target price for SK hynix from 3.8 million won to 4.2 million won and maintained its investment rating at "buy." The move came as the firm projected that global artificial intelligence investment will enter an acceleration phase in the second half of this year and that memory shortages will persist through 2028.
Reflecting this year's memory price gains, with DRAM up 199% and NAND up 255%, it also raised its operating profit estimates for this year and next year to 29 trillion won and 46.8 trillion won, respectively.

Kim Dong-won, head of research at KB Securities, said, "In 2027, DRAM and NAND wafer production capacity is expected to rise by only 7% and 4% year on year, respectively, while demand is projected to grow by 17% and 19%. As a result, the memory shortage will deepen further next year."
The brokerage also expects SK hynix's earnings momentum to strengthen as the second half of the year approaches. According to KB Securities, SK hynix's operating profit in the second quarter is estimated at 6.9 trillion won, up 649% from a year earlier, with an operating margin of 77%. Third-quarter operating profit is also forecast to rise 662% year on year to 8.7 trillion won, with an operating margin of 82%.
Global AI investment is projected to grow from $800 billion in 2026 to $1.1 trillion in 2027 and $1.5 trillion in 2028. Kim said, "The free cash flow of the seven major U.S. tech companies will jump 91% year on year in 2028 as AI monetization begins, returning to 2024 levels." He added, "Since 2022, memory demand has increased 100-fold so far, and it is expected to rise another 100-fold over the next five years."
He also said, "The spread of AI agents will triple memory demand, while autonomous driving and humanoid robots will increase it by another 10 times." He added, "As a result, the share of memory semiconductors in AI investment will surge from 14% in 2025 to 50% in 2027."

bng@fnnews.com Kim Hee-sunbng@fnnews.com Kim Hee-sun Reporter