The KOSPI index has been experiencing significant fluctuations, heightening market anxiety. In particular, the surge in stock prices for Samsung Electronics and SK Hynix, fueled by the AI semiconductor boom, has raised concerns about a potential bubble. The market has seen daily shifts in market capitalization amounting to tens of trillions of won, prompting questions about whether prices have risen too high and if it might be time to realize profits.
While it is easy to overlook certain aspects when focusing solely on stock price movements, it is essential to remember that stock prices ultimately reflect corporate value. To determine whether a bubble exists, one must first assess the companies' ability to generate profits rather than just their stock prices. A frequently cited reason for bubble concerns is the overwhelming market capitalization of Samsung Electronics and SK Hynix, which recently surpassed 50% of the total KOSPI market capitalization, effectively controlling the domestic stock market.
Other figures must also be considered. According to projections from the securities industry, the combined operating profit of Samsung Electronics and SK Hynix is estimated to be between 600 trillion and 630 trillion won this year. As of the first quarter, these two companies accounted for 76% of the total operating profit of all KOSPI-listed companies. This indicates that it is not unusual for their market capitalization share to increase based on performance. The rise in stock prices reflects actual profit-generating capabilities rather than mere investor expectations.
Traditionally, memory semiconductors have been classified as a typical cyclical industry, responding to demand from smartphones and PCs. Investors have made decisions based on the cycles of boom and bust.
However, with the intensification of competition in generative AI and data centers, High Bandwidth Memory (HBM) has become an essential infrastructure for the AI industry. Global tech giants, including NVIDIA, are pouring substantial funds into expanding AI server capacity. As AI models grow larger, the demand for high-performance memory also increases. This is not merely a recovery in market conditions; a new demand market is forming. This is why securities firms are continuously raising their performance forecasts for Samsung Electronics and SK Hynix, with KB Securities predicting that Samsung Electronics will achieve an operating profit of 1,471 trillion won from 2026 to 2028.
However, not all perspectives are optimistic. U.S. semiconductor regulations, China's technological advancements, and the potential for a global economic slowdown could all serve as variables. If competition in the HBM market intensifies, the profitability may fall short of expectations. Stock prices could also experience significant corrections at times.
Nonetheless, the possibility of corrections and bubble concerns are different issues. A bubble refers to a situation where prices rise abnormally, regardless of performance. Many analysts believe that the growth in performance of Samsung Electronics and SK Hynix is outpacing the speed of their stock price increases. Compared to global AI companies like NVIDIA, their price-to-earnings ratios (PER) remain relatively low, which is why there are analyses suggesting they are still undervalued among domestic and international institutional investors.
It is difficult to discuss bubbles solely based on market capitalization share. Rather, it is a natural outcome that the semiconductor industry, a key beneficiary in the AI era, drives the stock market due to its performance. It is essential to examine whether Samsung Electronics and SK Hynix, which account for 60-70% of the total operating profit of the KOSPI, are receiving a fair evaluation.
If there are concerns about excessive dependence on these two companies, the solution is clear: new industries and companies must be developed that can generate similar profits and value. The market moves based on profits, not expectations.
* This article has been translated by AI.
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