HSBC Samsung Electronics (005930.KP) Buy: AI Inferencing Demand Provides Additional Tailwind for Memory Pricing
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HSBC maintains a Buy rating on Samsung Electronics (005930.KP), raising the target price from KRW 230,000 to KRW 300,000 based on robust earnings revisions. The firm argues that surging AI inferencing demand is providing an additional tailwind to memory pricing, accelerating the upward trajectory for both DRAM and NAND. Samsung remains HSBC's top pick in the Korean tech sector, benefiting from a memory super-cycle. The bank revised its 2026 and 2027 operating profit estimates upward by 30% and 31%, respectively. Projections now include 2026 operating profit of KRW 220 trillion (up 402% year-over-year) and revenue of KRW 530 trillion (up 59%). Notably, DRAM average selling prices are forecast to surge 70% in Q1 2026 and 25% in Q2 2026, significantly exceeding prior estimates. NAND margins are expected to expand dramatically from 8% in 2025 to 49% in 2026. The AI industry's focus is shifting from GPUs toward memory components, including High Bandwidth Memory (HBM), SO-CAMM2, and inferencing context memory (ICMS). The target price upgrade relies on a 2.5x target price-to-book multiple, reflecting peak valuations from 2005-2006. Key downside risks include potentially aggressive capacity expansion by memory manufacturers, rising US interest rates, and geopolitical disruptions in the Middle East.