"Next in Line After Samsung and SK hynix"... AI Investments to Boost These Stocks [Weekend Money]

Samsung Securities Highlights Promising Fourth Quarter Investments
Semiconductor Materials and Equipment, Power Infrastructure Among Top Picks

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There is a growing expectation that the rise in Korea’s stock market led by Samsung Electronics and SK hynix in the first half of this year could spread in the second half to semiconductor materials, components, equipment (so-called "SoBuJang" stocks), and to power infrastructure. As investments in artificial intelligence (AI) data centers expand, the increase in memory semiconductor production volumes could translate into improved earnings for related companies.

On the 3rd, Samsung Securities released its report on “4th Quarter Korea Stock Market Investment Strategy,” proposing memory semiconductors, semiconductor materials/components/equipment, and the AI infrastructure value chain as investment ideas.

Shin Seungjin, Head of Investment Information Team at the Research Center of Samsung Securities, analyzed, “If the first half was a price (‘P’) rally focused on Samsung Electronics and SK hynix, from the second half onwards, the benefit of increased quantity (‘Q’) due to expanded investment in production is likely to spread to SoBuJang stocks.” He explained that, in fact, as the second half progresses, the driving force behind stock gains is broadening into sectors associated with AI data center investments, such as multilayer ceramic capacitors (MLCCs), energy storage systems (ESS), renewable energy, nuclear power, and construction.

The core driver for semiconductor materials, components, and equipment suppliers is the order cycle tied to manufacturing expansions. Samsung Securities believes that while it will be difficult for semiconductor price growth rates to maintain the high levels of the past year, facility expansions to resolve supply shortages could result in new orders for SoBuJang companies. Eugene Technology, TES, and Hana Materials were suggested as noteworthy companies in this area.

Power infrastructure, which has emerged as a new bottleneck in the AI era, is also a sector to watch. Power demand from AI data centers is surging, driving expectations for increased investment in nuclear and gas power generation, as well as power equipment. Samsung Securities highlighted Doosan Enerbility, Hyundai Engineering & Construction, GNC Energy, and OCI Holdings as key companies related to AI data center infrastructure.

However, whether the upward trend in the stock market will continue smoothly in the fourth quarter ultimately depends on corporate earnings. With the yield on 10-year U.S. Treasuries exceeding 5% and international crude oil prices fluctuating in the $90-per-barrel range, AI-related companies will need to deliver profit growth strong enough to offset interest rate pressures for there to be additional stock market gains. Samsung Securities stated that the third quarter earnings season, starting in October, will serve as a litmus test for this.

Foreign investor flows also remain a concern. So far this year, foreign investors have been net sellers of approximately KRW 190 trillion in the KOSPI market, including about KRW 91 trillion for Samsung Electronics and roughly KRW 90 trillion for SK hynix. However, if long-term supply contracts increase and shareholder-friendly policies such as dividends, share buybacks, and cancellations continue, there is a possibility that foreign capital could return.

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