[Edaily Reporter Kim Kyung-eun ] Forecasts suggest that the stock prices of SamsungElectronics(005930)and SK hynix(000660) will rebound in November and December as they have entered a historically undervalued range. This outlook is based on the fact that the KOSPI formed two lows in July and October, confirming a so-called “W-shaped” bottom. Analysts predict that if uncertainty surrounding artificial intelligence (AI) investments eases following the U.S. midterm elections, stock prices—particularly those of major semiconductor companies—could begin to recover.

Kim Dong-won, Head of Research at KB Securities, stated in a report on the 22nd, “We believe the KOSPI has confirmed a ‘W-shaped’ bottom by forming two lows—at 5,262 points on July 29 and 5,450 points on October 15,” adding, “The market appears to have passed the peak of its concerns.”

KB Securities assessed that the valuations of the KOSPI, SamsungElectronics, and SK hynix have entered a historically undervalued range, falling below levels seen during past financial crises. Since hitting a high of 9,114 points on June 22, the KOSPI has plummeted 37.1% over approximately four months due to foreign selling and increased volatility in interest rates and oil prices. During this period, the KOSPI’s price-to-earnings ratio (P/E ratio) fell to around 4 times.

In particular, based on projected 2027 earnings, SamsungElectronics’ P/E ratio stands at just 3.3 times, while SK hynix’s is only 2.7 times. Analysts note that the gap between corporate earnings and stock prices has widened to a historic low.

Conversely, analysts note that demand for AI servers—which underpins the semiconductor industry—remains robust. KB Securities forecasts that demand for AI semiconductors will outpace supply through 2028. Given that stock prices have fallen excessively despite ongoing earnings growth, the firm believes there is a high likelihood of a valuation recovery in the future.

They also expect the pressure from rising U.S. interest rates to gradually ease. They explained that since the yield on the 10-year U.S. Treasury note appears to have formed a short-term peak in the mid-5% range, the pace of future rate hikes is likely to slow. They further analyzed that concerns over the financial soundness of emerging cloud companies, such as CoreWeave, have also been overly reflected in stock prices.

The U.S. midterm elections scheduled for November 3 were also cited as a key market variable. While concerns have been raised that AI-related investments could be scaled back if the Democrats secure control of both the Senate and the House of Representatives, the outlook suggests that the trend toward expanding AI infrastructure investment is likely to continue regardless of the election results.

“AI-related investment has emerged as a key driver of U.S. economic growth and is estimated to account for 40% of that growth,” explained Director Kim. “Both the Republican and Democratic parties share a consensus on the strategic goal of securing a technological edge in the competition for AI supremacy with China.”

Analysts suggest that even if the Democrats secure a majority in Congress, the impact may be limited to stricter safety and environmental regulations for data centers and tighter oversight of investments, with little likelihood that the policy direction of expanding AI infrastructure investment will change. Consequently, market focus is expected to shift from interest rates and supply-demand dynamics to corporate earnings.

Director Kim emphasized, “Following the U.S. midterm elections, uncertainty surrounding AI investment will ease, and earnings visibility for SamsungElectronics and SK hynix will improve,” adding, “Since current stock prices appear to have passed the peak of market concerns, this is the time to focus on upside potential rather than the risk of a decline.” He went on to forecast, “In November and December, a W-shaped rebound will begin as the unusual gap between earnings and valuations narrows.”