"SK hynix to Hit 4.7 Million Won, Samsung 670,000 Won"... Why Nomura's Bold Forecast justifies it

Nomura: "Memory Shortage to Persist Through 2028"
Maintains Price Targets of 670,000 Won for Samsung Electronics and 4.7 Million Won for SK hynix

Despite concerns about profitability in the artificial intelligence (AI) industry and funding, Nomura Securities expects memory semiconductor demand to outpace supply growth at least through 2028. The firm believes that continued data center expansion could sustain favorable supply-demand conditions for memory prices. Nomura named Samsung Electronics and SK hynix as key investment picks in the global memory industry and gave both stocks Buy ratings.

On the 21st, as the KOSPI opened higher, recovering the 5,700 mark during trading, a display board at the dealing room of Hana Bank's head office in Jung-gu, Seoul, showed the KOSPI, KOSDAQ and won-dollar exchange rate.

Recent market concerns have centered on the possibility that massive capital expenditures could contract if AI companies' revenue growth falls short of expectations or some data center operators face mounting funding pressures. Technological advances by China's ChangXin Memory Technologies (CXMT) have also been cited as a factor that could reshape competition in the memory market. Nomura, however, said it is difficult to judge the overall trajectory of AI infrastructure investment based solely on individual companies' performance and finances, and emphasized the potential for memory demand to grow over the medium to long term.

Demand Base Holds Despite Concerns About Slowing AI Revenue

Nomura said that assessing the AI industry's growth prospects requires looking at overall infrastructure investment and memory demand trends, rather than the short-term performance of individual companies. According to Nomura's estimates, combined revenue at OpenAI and Anthropic rose approximately 507% year over year in the third quarter of 2026. However, the firm noted that a sharp recovery in results in the fourth quarter would be needed to reach the annual revenue targets expected by the market.

This suggests that although AI companies are still growing rapidly, market expectations may be even higher. Investor sentiment could falter if revenue growth slows or falls short of targets, but Nomura believes that this would not necessarily signal a structural decline in demand for AI infrastructure.

Nomura also said that funding pressures on data center operators are unlikely to bring AI investment as a whole to a halt. While the financial risks facing individual operators could increase, other operators could make use of data centers and related equipment that have already been built. This means that even if an individual operator's investment capacity deteriorates, demand could continue as the users of infrastructure assets change.

Data Center Expansion Supports Memory Supply and Demand

The key reason Nomura is positive on the business outlook for Samsung Electronics and SK hynix is the global expansion of data centers. The scale of new data center capacity tracked by Nomura is expected to reach 22.3 gigawatts (GW) in 2026 and 31.5 GW in 2027. As infrastructure for data processing and AI computing expands, demand for semiconductors, including server memory, could also rise.

Based on this capital investment trend, Nomura forecasts that memory demand will grow faster than supply at least through 2028. If demand continues to outpace supply, this could also support memory prices and semiconductor companies' profitability.

Nomura believes market concerns about technological advances by China's ChangXin Memory Technologies in 4F² technology are overblown. While the possibility of intensifying competition as technology advances should be considered, the firm said there is no need to turn negative on the global memory supply-demand outlook as a result. Ultimately, not only technological competition but also the scale of data center investment and the actual pace of memory supply growth are key factors that will shape the industry's outlook.

Financial Strength of Semiconductor Suppliers Also in Focus

Nomura also highlighted the possibility that semiconductor suppliers' financial capacity could strengthen relative to that of others as AI infrastructure investment continues. It estimates that the combined net cash of nine semiconductor companies, including Samsung Electronics and SK hynix, will increase from $282 billion in the second quarter of 2026 to approximately $2 trillion by the end of 2028. These amounts are equivalent to approximately KRW 374.7 trillion and KRW 2,657 trillion, respectively.

This forecast is based on the analysis that semiconductor suppliers' financial positions could move in a different direction even as data center operators face mounting funding pressures. If expanding investment in AI infrastructure supports semiconductor demand and suppliers' cash generation, they could also gain greater financial capacity to respond to industry fluctuations.

Nomura also noted that Samsung Electronics and SK hynix have participated in investments in Anthropic. The two companies' investment activities and connections to the AI ecosystem suggest that their opportunities extend beyond memory supply to the growth of the broader AI industry.

Price Targets Set... Investment Plan Changes Remain a Risk

Nomura set price targets of KRW 670,000 for Samsung Electronics and KRW 4.7 million for SK hynix. Its Buy ratings on both stocks reflect expectations for higher memory demand driven by data center expansion and stronger financial positions among suppliers.

However, for this outlook to materialize, investment plans for AI infrastructure must continue. Nomura cautioned that it would need to reassess its memory demand forecast if data center investment plans continue to be scaled back or even projects with secured funding are significantly delayed.

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