Summary

  • Hana Securities said Samsung Electronics and SK Hynix have come under short-term pressure on data-center concerns, but investors need a strategy to use the sharp near-term selloff.
  • Hana Securities said the earnings impact on chipmakers should be limited despite uncertainty over data-center regulation, and that it would be difficult to aggressively restrict AI investment.
  • Hana Securities said investors should consider an overweight strategy as the market digests data-center uncertainty, citing a floor at PBR in the 1.2 range for Samsung Electronics and SK Hynix and a rising HBM mix.

Forecast Trend Report by Period

Hana Securities said on November 6 that Samsung Electronics Co. and SK Hynix Inc. may face a short-term share-price correction on concerns over data centers, but the odds of fundamental restrictions on data centers remain low given the race for AI dominance. The brokerage said investors should use any sharp near-term selloff to add positions.

“The reason the stocks fell sharply in the short term is rising uncertainty,” Hana Securities analyst Kim Rok-ho said. He pointed to mounting concerns that Democrats gaining control of both chambers in the U.S. midterm elections could bring tighter data-center permitting requirements, shift grid expansion costs onto companies and lead to tougher environmental regulations.

Still, Hana said the actual impact on chipmakers’ earnings is likely to be limited. For data centers already under construction or fully permitted, there should be few variables. Given China’s broad support for its AI industry, the U.S. would also find it difficult to aggressively restrict AI investment.

Hana also said the stocks have fallen back near their previous lows. Samsung Electronics’ 12-month forward price-to-book ratio has dropped to 1.21, while SK Hynix’s has fallen to 1.23. That is close to levels seen during the sharp selloff in late July. Hana noted that both stocks found support at PBRs in the 1.2 range at that time.

Kim said he sees the floor in the AI era in the 1.2 range. That is because a rising share of high-bandwidth memory, or HBM, a customized product for clients, is reducing earnings volatility compared with the past.

He added that investors should consider increasing exposure as the market absorbs short-term uncertainty tied to data centers.

Kim Yeon-ji, Hankyung.com reporter [email protected]

Doohyun Hwang