KB Securities has set a target price of 600,000 won (approximately $400) for Samsung Electronics (005930.KS), projecting that 2027 will mark the tightest supply environment in the 70-year history of the semiconductor industry. The firm views Meta’s massive artificial intelligence (AI) infrastructure investment as a powerful signal that will dispel market concerns about a potential peak-out.
In a report released on the 13th, Kim Dong-won, Head of Research at KB Securities, stated: “With virtually no new general-purpose memory production capacity expansion in 2027, Big Tech companies will begin formalizing long-term supply agreements (LTAs) starting next year. New production volumes will be allocated first to Big Tech firms with LTAs, meaning the supply shortage felt by general customers will intensify to ‘supply cliff’ levels.”
The recent correction in Samsung Electronics’ share price is attributed to a combination of concerns over the sustainability of AI investment—sparked by Meta’s data center leasing plans—and debates over whether second-quarter earnings have peaked. However, Kim expects these concerns to be resolved once Meta formalizes its investment plans during its earnings announcement later this month.
Meta plans to build 7GW of AI data center capacity this year, followed by an additional 7GW in 2027, securing a total of 14GW of AI computing infrastructure. Meta’s AI investment this year is estimated at approximately 220 trillion won (approximately $146.8 billion), accounting for roughly 20% of total U.S. Big Tech investment. Kim emphasized: “Investors should take note of Meta CEO Mark Zuckerberg’s recent comment in an interview that ‘I don’t think anyone feels like they have enough compute in the AI industry.’”
Samsung Electronics’ earnings improvement is expected to accelerate into the second half of the year. KB Securities forecasts Samsung’s operating profit will reach 110 trillion won (approximately $73.4 billion) in the third quarter and 124 trillion won (approximately $82.8 billion) in the fourth quarter, representing a widening improvement compared to the second quarter.
Meanwhile, SK Hynix’s (000660.KS) planned U.S. American Depositary Receipt (ADR) listing is also cited as a catalyst that could drive a broader revaluation of South Korean semiconductor stocks. KB Securities expects that “strength in SK Hynix ADRs will create a chain effect, lifting the underlying shares and Samsung Electronics’ stock price, driving a virtuous cycle of semiconductor re-rating.”
Target prices for Samsung Electronics from major securities firms are clustered as follows: KB Securities at 600,000 won, NH Investment & Securities (005940.KS) at 530,000 won (approximately $354), Samsung Securities (016360.KS) at 500,000 won (approximately $334), Eugene Investment & Securities (001200.KS) at 560,000 won (approximately $374), Hyundai Motor Securities (001500.KS) at 440,000 won (approximately $294), and DB Securities at 360,000 won (approximately $240).
The Kospi’s valuation remains at historically depressed levels. According to Bloomberg, as of the 9th, the Kospi’s 12-month forward price-to-earnings ratio (PER) stood at 6.35x, lower than the 6.82x recorded during the global financial crisis in October 2008. This is roughly half of its 52-week high of 11.98x.
The Kospi’s undervaluation stems from corporate earnings far outpacing share price gains. Since the start of this year, the Kospi’s 12-month forward earnings per share (EPS) estimates have been revised upward by approximately 170%, marking the largest increase since 2006. EPS estimates have been revised upward for 17 consecutive months, the longest streak in about nine years.
The Kospi’s PER is merely one-third of Taiwan’s Taiex index PER, which has a high semiconductor weighting. With Samsung Electronics and SK Hynix accounting for more than half of the Kospi’s market capitalization, corporate governance issues and cyclical earnings structures are identified as the primary causes of the so-called “Korea Discount.”
Views among investors are divided. Francis Tan, Chief Asia Strategist at Indosuez Wealth Management, assessed that “if exposure to these names is not already significant, this is a good time to secure portfolio growth elements linked to the AI theme.”
Conversely, Charu Chanana, Chief Investment Strategist at Saxo Markets, cautioned that “South Korea needs evidence that the memory supercycle still has momentum,” noting that undervaluation alone cannot be a reason to buy. Chanana warned: “While many hyperscale cloud providers will continue massive spending this quarter, if they begin discussing cost optimization, that would be a signal that high prices are suppressing demand.”
Some experts also recommend a cautious approach, noting that the price-to-book ratios (PBR) of both Samsung Electronics and SK Hynix surpassed 2x for the first time this year, reaching all-time highs, and that on a price/earnings-to-growth (PEG) basis, they are no longer significantly undervalued.
Risk factors include the growing competitive threat from late entrants such as China’s ChangXin Memory Technologies (CXMT) and the extreme volatility of semiconductor stocks. The prospect that memory prices could peak in mid-2027 also weighs on sentiment.
Despite these concerns, KB Securities maintains a strong buy rating on Samsung Electronics, judging that Big Tech’s AI investment has entered a paradigm-shifting phase that is creating structural demand.