Yang Ji-hwan, Head of the Research Center at DaishinSecurities, stated in a recent interview with E-Daily that interpreting the recent pullback in stocks such as SamsungElectronics(005930) and SK hynix(000660) as a sign of a slowdown in the AI industry is an overreaction. He assessed that investment in AI infrastructure and demand for memory remain robust, and that the recent pullback is largely driven by profit-taking. However, he advised that while maintaining a positive outlook on the industry, a cautious approach is needed regarding overly optimistic target prices set for semiconductor stocks.
◇Semiconductor Stocks: Still a “Buy”... But Realistic Target Prices Must Be Assessed
Yang stated that he maintains his recommendation to increase exposure to semiconductor stocks. “Investment in AI infrastructure continues to expand, and profitability is expected to improve amid the memory bottleneck,” he said.
He also drew a clear line regarding the market’s recent interpretation of Meta’s entry into the AI cloud business as a sign of slowing AI investment. He explained that since Meta has raised its capital expenditure forecast for this year and secured additional data center computing capacity, it is difficult to view this as a reversal of its investment momentum. Center Director Yang assessed, “Meta’s strategy is not driven by an excess of AI infrastructure, but rather aims to monetize some capacity and model access rights in response to future changes in demand,” adding, “It is unlikely that the concerns recently raised will lead to an actual slowdown in demand or a deterioration in memory profitability.”
Regarding the recent correction in semiconductor stock prices, he assessed that it is largely driven by profit-taking. He elaborated, “As semiconductor stock prices have risen so rapidly, the desire for profit-taking has grown significantly,” adding, “It is accurate to view this as a process where sharply risen stock prices are reacting sensitively to even minor news.”
Regarding the fact that global investment banks (IBs) such as Morgan Stanley and UBS have been issuing negative opinions on semiconductor stocks one after another, he said, “The role of an analyst is to estimate a company’s future earnings and present a valuation based on that, but it seems these firms are heavily focused on trying to predict short-term stock price movements themselves.”
Investor confusion is also growing as target prices recently set by domestic securities firms for SamsungElectronics and SK hynix have diverged significantly. He explained, “Adjustments to target prices following downward revisions to earnings estimates are a natural phenomenon,” adding, “Compared to a month ago, SamsungElectronics’ operating profit estimates have been lowered by about 5 trillion to 6 trillion won, reflecting cost issues such as performance-based bonuses.”
However, he pointed out that the feasibility of excessively high target prices must also be considered. “If the target prices proposed by some securities firms were to be realized, the market capitalization of each company would reach around 3,000 trillion won,” he said. “At that level, the KOSPI would also have to be much higher than it is now, so the realism of these target prices needs to be evaluated as well.”
◇10,000–11,000 P possible… Non-semiconductor sectors also in focus during earnings season
He forecast that the stock market in the second half of the year still has room for further gains, driven by earnings-led momentum. “Ultimately, stock prices cannot help but reflect earnings,” he said. “Based on the current 12-month forward earnings per share (EPS), applying a price-to-earnings ratio (P/E ratio) of 10 would make it possible for the KOSPI to reach the 11,000 level. Even from a conservative perspective, the 10,000-point mark is well within reach.”
He emphasized that non-semiconductor sectors also deserve attention during this second-quarter earnings season.
Center Director Yang said, “Non-semiconductor sectors, such as shipbuilding and defense, are also highly likely to emerge from their recent slump, buoyed by stronger exports and favorable exchange rates,” adding, “During this earnings season, balanced earnings improvements across both semiconductor and non-semiconductor sectors will help alleviate the KOSPI’s concentration risk and serve as a driving force to strengthen the upward trend.”
However, he noted that an inflection point could form in late August and early September. “After the second-quarter earnings season, forward EPS momentum may peak, and factors such as changes in U.S. monetary policy and oil price trends could increase market volatility,” he said. Nevertheless, he predicted, “Given the ongoing recovery in the global manufacturing sector and the continued profit momentum centered on semiconductors, it is unlikely that the upward trend itself will reverse,” adding, “Stabilizing bond yields and a weaker U.S. dollar will lead to improved foreign capital inflows, which will support the stock market’s upward momentum.”
