[E-Daily Reporter Kim Kyung-eun ] SamsungElectronics(005930) Although stock prices plummeted amid concerns that AI investments would slow due to rising U.S. long-term Treasury yields, analysts suggest that the return on AI investments may come sooner than expected, potentially offsetting the burden of higher interest rates. This outlook stems from the increasing likelihood that U.S. Big Tech companies will recoup their AI investments within three years, coupled with projections that cloud capacity shortages will persist through 2028.

Kim Dong-won, Head of Research at KB Securities, stated in a report on the 20th, “From an investor’s perspective, what matters more than rising interest rates is whether AI investments can withstand current interest rates and translate into future profits.”

SamsungElectronics’ stock price fell 10% over the two days of the 19th and 20th, erasing all of this month’s gains. This was driven by concerns that rising U.S. long-term Treasury yields would increase the cost of financing AI investments, potentially curbing AI spending by Big Tech companies.

However, Daol Investment & Securities assessed the recent rise in Treasury yields as a superficial concern. The increase in corporate bond issuance by U.S. hyperscalers resulting from expanded AI investment this year is estimated to have pushed up the U.S. 10-year Treasury yield by approximately 0.3 percentage points. Given that AI investment was one of the causes of the rate hike, the firm believes that how quickly the investment can be recouped is more important than the interest rates themselves.

Analysts suggest that the likelihood of recouping AI investments is higher than before. Based on recent quarterly earnings conference calls from major hyperscalers such as Amazon, Google, and Microsoft, KB Securities assessed that the likelihood of the payback period for AI investments being within three years has significantly increased.

Cloud demand also supports this view. Most of the cloud infrastructure capacity of major hyperscalers is effectively fully booked through 2028. The firm projected that the phenomenon of demand deferral—where unmet demand this year carries over to next year, and next year’s demand carries over to 2028—will continue at least until 2028. It explained that supply continues to lag behind demand not only in memory but also in the cloud sector.

KB Securities predicted that the early monetization of AI investments would gradually alleviate market concerns about rising financing costs. While rising U.S. Treasury yields are a factor driving up the cost of financing AI investments, the firm believes that if the pace of capital recovery accelerates, the burden on profitability could be limited.

The firm also assessed that the recent correction in SamsungElectronics’ stock price was driven more by concerns over rising interest rates than by a deterioration in fundamentals. Since 2000, there have been four instances where SamsungElectronics’ stock price fell by more than 40% from its peak: 47% in 2008, 47% in 2022, 44% in 2024, and 49% this year. In the first three instances, the stock price rebounded one month, three months, and six months after hitting bottom.

The firm also projected that large-scale shareholder returns would serve as a catalyst for future stock price revaluation. SamsungSecurities estimated that, considering SamsungElectronics’ shareholder return policy—which allocates 50% of its cumulative free cash flow (FCF) for 2024–2026—the special dividend would exceed at least 100 trillion won.

“Going forward, large-scale shareholder returns are expected to serve as a powerful catalyst not only for the rise in SamsungElectronics’ enterprise value but also for a revaluation of the entire KOSPI market,” said Division Head Kim.