Samsung Electronics and SK Hynix have gone from powering South Korea’s artificial-intelligence rally to becoming symbols of its violent unwind.
Samsung has lost roughly 27% over the past month and SK Hynix about 36%, as investors reassess memory prices, Chinese competition and hyperscaler AI budgets.
Friday offered little relief as Samsung finished 0.22% higher, while SK Hynix fell 4.88% and the Kospi slipped 0.6%.
Goldman Sachs sees the sell-off differently. Rather than signalling the end of the memory boom, the bank believes investors are pricing a downturn.
Goldman thinks investors are pricing the bust too early
Goldman reiterated its Overweight view on Korean equities and a 12-month Kospi target of 12,000, arguing that memory remains central to the bull case.
“Our central case is that the memory cycle is likely to be stronger and last longer than previous ones,” Goldman analysts wrote in a note.
They said accelerating AI-compute demand and severe shortages could support chip prices and profits longer than investors expect.
The bank acknowledges risks around Big Tech capital expenditure, financing capacity and competition, but argues that the share prices increasingly reflect a harsher outcome than those risks justify.
That matters after the Kospi’s 22% July fall. Samsung and SK Hynix dominate the index, so investors reducing Korea exposure have often sold both chipmakers regardless of their earnings outlooks.
UBS says the physical memory market remains tight
Goldman is not alone in arguing that the memory cycle remains stronger than stock prices suggest.
UBS said the memory upcycle was “strengthening further,” after global memory sales reached a record $74.6 billion in July.
The bank expects DRAM contract prices to rise 32% in the third quarter and another 18% in the fourth.
UBS expects DRAM demand to exceed supply through at least the second quarter of 2028. It forecasts HBM demand to increase about 90% in 2026 and another 77% in 2027 as hyperscalers expand AI infrastructure.
That outlook supports SK Hynix. William Blair analyst Sebastien Naji called it the “memory leader for the AI era”, Barron’s reported.
The contradiction is striking as shares are trading though the cycle while forecasts still point towards shortages and rising contract prices.
Also read- Top DRAM ETF stocks to watch this week: Western Digital, SanDisk, Micron
Deleveraging may be making the correction look worse
Market mechanics have intensified the fall.
Goldman estimates assets in Korean leveraged ETFs have dropped from $53 billion at their June peak to $25 billion, while retail margin-loan balances have fallen from $25 billion to $19 billion.
With investors cutting borrowed exposure and hedge funds reducing positions, Goldman says positioning is now “much cleaner”.
As per market data, the leveraged ETFs tied to Samsung and SK Hynix had collapsed from about $50 billion in late June to $17 billion last week.
JPMorgan analysts said the ETF unwind was complete and hedge-fund deleveraging was roughly 90% finished.
Short positioning creates another catalyst.
Citi analyst David Chew told MarketWatch that short interest in Korean equities had reached a three-year high, leaving the market vulnerable to a squeeze if AI sentiment stabilises.
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