Global investment bank Nomura Securities has stated that the semiconductor supercycle driven by the rise of artificial intelligence (AI) has just begun, suggesting a potential reevaluation of domestic semiconductor companies. As demand for AI-driven memory continues to surge, there is an analysis that the valuation of the semiconductor sector, particularly for Samsung Electronics and SK Hynix, may expand significantly.
At a media briefing on the 2026 South Korean economy and stock market held at the Seoul Finance Center on June 12, Jeong Chang-won, co-head of Asia Research at Nomura, noted, "This year's monthly memory sales show a vertical increase, which is something we have never seen before."
He added, "Investors may wonder if they should sell when memory prices rise sharply and then stabilize, but the key factor is valuation. Considering this, I believe the semiconductor supercycle has just begun."
Jeong emphasized that the phase where stock prices rise solely due to target price increases is about 80-90% complete, stating, "Now, it is crucial to confirm the sustainability of growth, which will lead to an increase in multiples."
He particularly highlighted the surge in memory demand triggered by AI, predicting that AI-driven memory demand could increase by 10,000 to 20,000 times over the next five years, stating, "A market entirely different from the past is opening up."
Addressing concerns about a potential slowdown in AI investments, Jeong clarified, "There were worries about reduced investments due to profitability issues among generative AI companies like OpenAI, Anthropic, and xAI, but those concerns have significantly eased. The market currently accepts that investments in AI infrastructure will continue."
Last month, Nomura raised its KOSPI target from 8,000 to between 10,000 and 11,000, based on the belief that the semiconductor supercycle and rising corporate profits will drive the domestic stock market.
Park Se-young, head of Korean Research at Nomura, stated, "The AI value chain will be a key driver of the market rally, along with industries benefiting from increased power demand, such as defense and automotive sectors."
Nomura identified its top picks as Samsung Electronics, SK Hynix, Hyundai Rotem, Kia, and Samsung SDI.
Park noted, "Even if the KOSPI rises to 11,000, the price-to-earnings ratio (PER) will still be around 13.5, which remains undervalued compared to major markets like Taiwan, the U.S., and Japan."
He added, "The number of companies announcing value-up plans has increased from 170 at the end of last year to about 730 now, and there is also a rise in dividend expansions and share buybacks and cancellations. Improvements in corporate governance and enhanced shareholder returns are also factors for the reevaluation of the Korean stock market."
* This article has been translated by AI.
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