Nomura Sharply Raises Samsung, SK Hynix Price Targets, AI Inference Ignites Memory Demand

TradingKey - Nomura Securities has raised its price target for Samsung Electronics to 590,000 KRW and for SK Hynix to 4 million KRW, citing exponential growth in AI memory demand. As of 12:00 Seoul time on May 19, Samsung Electronics' stock price stood at 272,000 KRW, while SK Hynix was trading at 1.7735 million KRW.

Nomura noted in its report that AI demand is shifting from training to inference. Taking token consumption as an example, unit demand in inference scenarios is surging; the output tokens required to generate one hour of video are millions of times greater than those for a simple Q&A, driving an exponential expansion in memory demand. In the AI field, a token is the smallest unit of information for large models to process, understand, and generate text, and serves as the basic unit for billing.

The report estimates that memory demand could grow several thousand-fold over the next five years, but due to capacity cycle constraints, supply is only expected to grow by about 5 to 6 times, ensuring a persistent structural supply-demand gap.

Supply-demand tightness has been fully validated by financial results. Samsung Electronics' first-quarter operating profit reached 57.2 trillion KRW, a year-on-year surge of over 750%, setting a new record for the highest quarterly profit for a South Korean company. The semiconductor business contributed 53.7 trillion KRW, accounting for over 93%. SK Hynix's operating profit for the same period was 37.61 trillion KRW, a year-on-year increase of 405%; its operating profit margin reached 72%, both hitting historical highs.

Nomura compared the valuations of these two memory giants with TSMC. TSMC's 12-month forward P/E ratio is approximately 20x, while Samsung and SK Hynix are at only about 6x. Nomura expects the valuation logic for the latter two to gradually converge with that of TSMC.

Notably, SK Hynix has confidentially filed for a U.S. listing, planning to complete its ADR listing within 2026, with a potential debut on U.S. capital markets as early as July. Currently, SK Hynix's forward P/E ratio is about 6x, lower than Micron's ( MU) 8x valuation level.

As a core global HBM supplier, it has long faced a valuation discount in the Korean market. Following the ADR listing, its valuation is expected to align with U.S. peers. Combined with AI demand exceeding expectations and record-high earnings, the potential for upward valuation revisions is further strengthened.

Nomura particularly emphasized in its report that the current memory industry's long-term supply agreement terms have been extended to 3-5 years, featuring prepayments and capital expenditure support commitments. This contract structure differs significantly from previous versions that repeatedly failed in the past.

Customer demand for HBM and high-performance products has already surpassed the industry's medium-to-long-term supply capacity. Nomura believes this structural supply-demand gap is sufficient to support sustained high profitability for manufacturers and provides a solid foundation for SK Hynix's valuation following its listing.