Amid 'Four Millionnix' Hopes, Spotlight Returns to the Lone Securities Firm That Set 'One Point Eight Five Million' Target

When Major Securities Firms Set 4 Million Won Targets,
BNK Securities Alone Flashed a '1.85 Million Won' Warning

The stock price of SK hynix, which was on the verge of surpassing the symbolic 3 million won threshold as it led the boom in the global artificial intelligence (AI) semiconductor market, has reversed course into a steep decline, even threatening the psychological lower limit of 1.8 million won. Amid this, a securities firm report that stood alone in setting a 'target price of 1.85 million won', at a time when the market was intoxicated with optimism, is being re-examined. Although it was initially regarded as an overly conservative outlook, it is now seen, in hindsight, as an 'early signal' predicting a short-term adjustment.

A dealer is working in the dealing room at the Seoul Hana Bank headquarters. Photo by Yonhap News Agency

Target Price of 1.85 Million Won Seen as 'Effectively a Sell'

On July 9, BNK Securities maintained a "Hold" recommendation and a target price of 1.85 million won for SK hynix in its report. While ostensibly reiterating its previous stance, the fact that the closing price on July 8 was 2.076 million won led the market to interpret this as an effective 'sell signal'.

On June 25, SK hynix's stock price soared to 2.987 million won, putting the company just short of the "3 Millionnix" milestone. In particular, most reports at the time had set target prices for SK hynix far above its trading price. On the same day, KB Securities maintained a "Buy" rating and a target price of 4.2 million won, commenting that "the peak is still far ahead."

Similarly, Daishin Securities raised its target price for SK hynix to 3.9 million won on July 7, explaining that "the NASDAQ ADR listing is expected to resolve the valuation discount." Other firms issuing SK hynix-related reports this month—Sangsangin Investment & Securities (3.8 million won), NH Investment & Securities (4.1 million won), IBK Investment & Securities (4 million won), and Kyobo Securities (4 million won)—all raised their target prices.

However, within just four days, the share price fell by about 15%, dropping to 1.845 million won, with some sessions even threatening the 1.7 million won level. As a result, BNK Securities' report was retrospectively seen as having accurately identified the short-term stock movement.

Was Slowing AI Investment a 'Crack Signal'?

The central rationale of the report was the potential slowing of the AI infrastructure investment cycle. BNK Securities assessed that while there remains a supply shortage of DRAM for AI servers and enterprise SSDs (eSSD), it is becoming increasingly difficult for hyperscalers to continue their aggressive investment competition that has supported demand so far.

Semiconductor circuit board. AFP Yonhap News

This is interpreted not as a simple drop in demand, but as a possible moderation in the pace of investment. In fact, some global big tech companies are ramping up their use of in-house infrastructure or seeking greater investment efficiency, a development pointed to as a factor that could undermine market expectations.

Additionally, concerns have been raised that full-fledged entry into the market by Chinese firms, following the ongoing AI rally, could usher in a phase of oversupply in the mid- to long-term. The significance of this outlook lies in its suggestion that the current 'supply shortage' narrative may not be sustainable over time.

"Looks Cheap, But It's Expensive"… The Paradox of the Cycle

The report also highlighted the cyclical nature of the semiconductor industry. It pointed out that while valuations may appear low in the late stage of a sharp earnings improvement, this stretch can in fact coincide with a near-peak in the share price.

This argument is persuasive given that the memory industry is among the most cyclical sectors. Once demand momentum subsides, the appeal of a low price-to-earnings ratio (PER) can turn out to be a trap. In other words, it's a phase where the "illusion of cheapness" can take hold. This perspective, coupled with forecasts that earnings momentum will slow after the end of the year, led to the conclusion that SK hynix's valuation may no longer be attractive from next year onward.

Securities Firms Lower Earnings Expectations in Succession

Recently, leading securities firms have been lowering their earnings estimates for SK hynix in succession. This has been interpreted to signal not just a simple share price adjustment but a decline in fundamental expectations.

SK.

Mirae Asset Securities has cut its estimate for second-quarter operating profit by around 12%, from 7.07 trillion won to 6.23 trillion won. Hyundai Motor Securities also revised down its estimates for revenue and operating profit to 8.76 trillion won and 6.24 trillion won respectively, while Korea Investment & Securities lowered its operating profit estimate to 6.04 trillion won.

However, some analysts argue that the recent sharp correction in share price has already priced in much of these concerns. Accordingly, there are also opinions that buying at the dip remains a valid strategy in the short term.

This content was produced with the assistance of AI translation services.