Shares rose 97% of the time 60 days after falling at least 40%... A flood of ‘bold analysis’ on Samsung Electronics after its stock price was halved

[Financial News] Samsung Electronics Co., Ltd. (005930) shares have been plunging amid concerns about regulation of AI infrastructure that emerged after the U.S. midterm elections. But analysts, citing improving earnings and historical data, say that “now, with pessimism at its peak, is a period for a powerful rebound.” They say external policy uncertainty has been more than priced in, while earnings forecasts have been sharply revised upward, maximizing the stock’s valuation appeal.

According to the securities industry on the 9th, Samsung Electronics Co., Ltd. shares closed at 188,700 won as of the 6th, down more than 50% from the peak recorded on June 19.
In a report released that day, Kim Dong-won, head of research at KB Securities, described the recent share-price correction as a historical bottom. “Looking at Samsung Electronics Co., Ltd.’s share-price movements over the 20 years since 2005, the rate at which the stock rose 60 days after falling at least 40% from its peak was over 97%,” Kim noted.
The explanation is that the recent steep decline resulted from a confluence of external headwinds rather than a deterioration in the company’s own fundamentals. Intensifying competition among big tech companies to raise capital for AI and concerns about returns on investment were compounded by uncertainty over AI data-center regulation following the “blue wave,” in which Democrats took control of both chambers of Congress in the U.S. midterm elections. This, analysts say, led to continued mass selling, led by foreign investors.

In stark contrast to the steep drop in the share price, earnings forecasts are being sharply upgraded.
KB Securities estimated Samsung Electronics Co., Ltd.’s operating profit at 381 trillion won this year, a 774% surge from the previous year, and at 640 trillion won next year (2027), up 68%. The cumulative operating-profit forecast for the next two years alone reaches 1,021 trillion won.
Kim stressed that “the sharp drop in the share price has pushed the price-to-earnings ratio (P/E) down to around 3, widening the gap between earnings and the share price to the largest level in history,” adding that “the current share price has excessively priced in external policy variables and vague pessimism.”
The U.S. Democrats’ push to regulate AI, which has become a flashpoint for market anxiety, was also expected to fall short of undermining structural demand in the semiconductor industry.
Kim said, “The Democrats’ political clock is already ticking toward retaking the White House in 2028 (the presidential election),” adding that “with AI infrastructure investment accounting for at least a third of its contribution to U.S. economic growth and having become a key pillar of local jobs and local tax revenues, the possibility of curbing investment across the board is extremely limited.”
In Loudoun County, Virginia, data-center-related tax revenues account for 38% of the local government’s total budget, while the corresponding share in Prince William County is also as high as 28%. A blanket ban on construction would inevitably bring a massive political burden and a contraction in the local economy.
Accordingly, the report forecast that the Democrats’ regulatory approach would stop short of blanket restrictions and instead remain “selective, conditional regulation,” such as reducing tax incentives for data centers or encouraging big tech companies to cover the costs of expanding the power grid themselves.
Kim suggested that “policy regulation may slow the pace of AI investment to some extent, but it will be difficult to halt the structural demand generated by the technological revolution itself,” adding that “now, with fear and pessimism at their peak, is precisely the time to focus on the potential for a rebound through bargain buying.”
[email protected] Moon Young-jin Reporter