Samsung, SK hynix sell-off excessive as memory outlook stays strong: analysts

Analysts have stated that the recent significant sell-off in shares of Samsung Electronics and SK hynix has been excessive, not due to deteriorating earnings, but rather due to a lack of buying support in the Korean market and reduced investor confidence. The semiconductor giants experienced a sharp decline in their stock prices, with Samsung falling 23.9% and SK hynix dropping 31.5% over a seven-day period starting on October 6th.

This steep drop came amid a broader decline in the KOSPI benchmark index, which fell 21% during the same period. Despite the overall market downturn, Samsung and SK hynix shares were particularly hard hit, leading to a narrowing gap between their stock prices and underlying fundamentals.

On Friday, however, there was a recovery in the market, with Samsung shares gaining 3.33% and SK hynix rising 1.11%. The KOSPI index also rebounded by 2.05%, ending a seven-session losing streak. This recovery suggests that the excessive sell-off may have been driven more by panic-selling and negative sentiment rather than a fundamental decline in the outlook for these memory-focused companies.

Analysts believe that the sharp drops in Samsung and SK hynix share prices have pushed their valuations to relatively low levels, reflecting the strong demand for artificial intelligence (AI) applications and the improving memory supply situation.