Japan's largest brokerage nearly doubles targeting on Samsung and SK Hynix. What about the stocks?

Nomura sharply raised its target prices for shares of South Korean memory chip makers Samsung Electronics and SK Hynix. Now Japan's largest brokerage company forecasts their value to more than double in a year.

Analysts at Nomura on Ma 18 raised their target for Samsung securities by 74% from 340,000 to 590,000 won ($392) per unit. Target for SK Hynix securities was raised by 71% - from 2.34 million to 4 million won ($2640). The updated forecast assumes growth of quotations of Samsung by 110%, and SK Hynix - by 117% from the closing price of yesterday's trading in Seoul. Nomura also reiterated a Buy recommendation for both companies, according to MarketScreener.

Nomura explained the revised forecast by the fact that from the third quarter of 2025, the industry is experiencing a "triple supercycle" covering the segments of high-bandwidth memory (HBM), RAM (DRAM) and solid-state drives (SSD), CNBC quoted the broker as saying. The boom in artificial intelligence has triggered a sharp increase in demand for high-speed memory, the largest suppliers of which are Samsung and SK Hynix.

The main factor determining the market dynamics is the acute shortage: customer demand for HBM memory already exceeds the medium- and long-term production capacity of the sector. Nomura estimates that in the next five years the output of these components can increase only 5-6 times, while the global demand for them can grow a thousandfold.

This imbalance is caused by the development of new artificial intelligence technologies, in particular the introduction of augmented sampling (RAG) generation models and autonomous software agents. These algorithms independently search for valid answers in databases and the Internet to minimize neural network errors, which requires huge computing power and stimulates the purchase of both traditional servers and new categories of semiconductors.

For chip manufacturers, the current situation means an unprecedented period of rapid revenue growth and profitability expansion. In 2026, the total profit of memory chip companies will increase 7-8 times. And in the next three to five years, the industry will show annual growth in profits and sales of about 30%, Nomura expects.

The realization of Nomura's optimistic forecasts is threatened by a large-scale strike of Samsung Electronics employees: the company's management and the largest trade union are holding final negotiations, trying to prevent an eighteen-day work stoppage, which is to begin on Thursday, reports the Korean news agency Yonhap. In case the negotiations fail, the consequences will be catastrophic: due to the critical dependence on semiconductor exports, the South Korean economy may lose up to 100 trillion won (about $67 billion), the agency points out.

The parties cannot agree on bonuses in the division that produces chips for AI: the employees demand to fix bonuses at 15% of the operating profit of the direction and cancel the limits of payments, while the employer proposes to limit the incentive fund to 10% and opposes the equal distribution of money between profitable and unprofitable segments, explains Yonhap.

Against the background of the approaching strike Samsung securities fell more than 5% in the first hours of trading on May 19 in Seoul, but in the second half of the day almost completely recovered the drawdown. SK Hynix quotes are down by 4%. At the same time, the vast majority of stock experts continue to recommend shares of both companies to buy - with a consensus rating of Buy, indicates FactSet.

This article was AI-translated and verified by a human editor