Analysts Call Samsung, SK hynix 'Extremely Undervalued' After 40% Slide

The Bull Case for Samsung and SK hynix After a 40% Drop

Analysts at KB Securities have labelled Samsung Electronics and SK hynix "extremely undervalued" after both memory-chip makers lost more than 40% from their previous highs. The decline, according to KB Securities' Jeff Kim, followed a large-scale unwind of leveraged positions rather than a deterioration in the underlying AI memory business.

At the 12 August close, Kim calculates Samsung trades at 3.7 times and SK hynix at 3.2 times estimated 2027 earnings per share. That is the core of his argument: the steep profit growth expected in 2027 is, in his view, barely reflected in current share prices, leaving room for a material re-rating.

The expected profit surge is concentrated in AI-related memory. More than 60% of production at the two groups is tied to multi-year supply contracts with hyperscale customers, while memory prices are rising. Analyst forecasts point to triple-digit year-on-year operating profit growth in the current quarter: 817% at Samsung and 579% at SK hynix, with margins of 55% and 78% respectively.

A separate development has widened attention on the sector: SK hynix's recently introduced American Depositary Receipts. Priced at $149 on 10 July, the ADRs closed around $161.04 on 28 August, after at least six brokers — including Bank of America Global Research — began coverage with buy-equivalent ratings. Rosenblatt Securities set the highest target at $320.

Inside the Revaluation Case — and the Delivery Risk

Where Jeff Kim's valuation gap comes from

The analyst's re-rating thesis is not based on a modest earnings recovery. He contrasts current multiples of 3.7x and 3.2x estimated 2027 EPS with operating profit expectations that would be many times last year's level. In his view, the market is pricing the stocks as if the expected AI memory boom has already stalled, while supply contracts and rising memory prices suggest the opposite. Kim also points to shareholder return plans as a potential catalyst, citing a Samsung dividend yield above 7% and drawing a parallel with TSMC.

Why SK hynix's US listing changes the investor base

The ADR placement is a practical route to international capital. The listing raised roughly US$26.5 billion, and the early positive coverage from Bank of America, Rosenblatt and others explicitly cites SK hynix's leading position in high-bandwidth memory and strong orders from US technology companies. That broader investor base supports the stock, but it also makes sentiment more sensitive to delivery misses.

The execution risk beneath the bull case

Not all recent signals have been positive. SK hynix's latest quarterly report showed a record profit but missed analyst expectations because of delivery delays in advanced memory products. That shortfall raised doubts about the speed of AI-related investment — the same factor underpinning the bullish earnings estimates. For investors, the valuation case turns on whether the companies can convert contracted demand into on-time chip output.

What the Analyst Calls Mean for Investors

The analyst commentary is a market view, not a forecast of certain returns. The most concrete near-term checkpoints are the third-quarter reports, where the bull case expects operating profit to rise 817% at Samsung and 579% at SK hynix from a year earlier.

• If Samsung's Q3 results confirm the projected 55% operating margin and SK hynix's confirm the 78% margin, the "unpriced 2027 earnings" argument becomes harder to dismiss.
• SK hynix's ADR price of $161.04 sits about 8% above its $149 July placement price; Rosenblatt's $320 target implies a much larger re-rating but depends on resolving the advanced-memory delivery delays that caused the last quarterly miss.
• The valuation multiples cited by Kim — 3.7x Samsung and 3.2x SK hynix on estimated 2027 EPS — are only meaningful if those forward estimates hold; any further evidence of delivery or hyperscaler order slowdown would challenge that base case.
• The over-60% share of production locked into multi-year hyperscaler contracts cuts both ways: it supports revenue visibility while exposing the two companies to concentrated customers and rising memory input costs.