SK Hynix, Samsung rebound 6.8% as KOSPI recovers from 7.9% rout

The KOSPI rose 2.9% to 7,870 on Friday as bargain hunters returned to Samsung Electronics Co. and SK Hynix Inc. after Thursday's 7.9% plunge, the index's lowest close in more than three weeks.

Thursday's selloff was an overreaction to Meta Platforms Inc.'s plan to sell computing power, which raised concerns about excess AI capacity, said Kim Young-gun, an analyst at Mirae Asset Securities. He called the weakness "a valid window for bargain buying in semiconductor stocks."

Samsung Electronics climbed 6.8% to 305,500 won, while SK Hynix advanced 4.6% to 2.289 million won, recovering a portion of the 9% and 15% losses, respectively, from the prior session. The selloff spilled into Japan, where the Nikkei 225 fell 2.5% and chipmaker Kioxia Corp. tumbled more than 13.5%. Even after the two-day swing, SK Hynix has gained more than 200% this year, while Samsung is up roughly 30%.

The rebound faces its next test on July 7, when Samsung is due to release preliminary second-quarter results. A strong earnings report could confirm that AI-driven memory demand remains intact and turn the bounce into a sustained recovery.

Capex Surge to $806 Billion Supports Bull Case

The bullish case rests on spending that shows no signs of slowing. Mirae Asset Securities estimates global big-technology capital expenditure will reach $806 billion this year, up 73% from a year earlier, and expects spending to rise more than 20% again next year. Combined remaining performance obligations disclosed by big-tech companies in the first quarter totaled $2.1 trillion, up 24% from the previous quarter, with about $656 billion of that expected to be recognized as revenue within two years.

Samsung Securities analyst Kim Joong-han said computing power remains in an "absolute shortage," arguing that the entire industry, including Meta itself, may still lack sufficient capacity as AI demand keeps rising. Samsung Securities analyst Cho A-in said the volatility reflected conflicting interpretations of the same news, and that stronger-than-expected second-quarter earnings could ease doubts about the durability of AI investment.

Morningstar this week raised its fair value estimates for both Samsung and SK Hynix, with equity analyst Jing Jie Yu saying "the current memory upcycle is tracking substantially stronger than expected," citing tight supply, resilient AI demand, and long-term supply agreements that are improving earnings visibility.

Samsung's July 7 Earnings Test Looms

The key question confronting investors is how long the favorable pricing environment can last before new supply catches up. Yu said he expects a massive increase in memory supply over the next two years to lead to a downturn in 2029 and 2030 as long-term supply agreements expire.

South Korea has been one of the world's best-performing stock markets this year, fueled by the surge in semiconductor and AI-related shares. The strong rally has left the market more susceptible to sharp pullbacks, with the KOSPI's Thursday rout marking one of its worst single-day declines of the year. The swings have triggered multiple trading halts in leveraged ETFs tracking Samsung and SK Hynix over the past two weeks.

Adding to the uncertainty, Samsung and SK Hynix have committed $520 billion to build four new memory chip plants in South Korea, a bet on long-term demand that also raises the stakes if the cycle turns sooner than expected. "A lot can happen to a technology cycle in that window," said Zavier Wong, a market analyst at eToro, noting that AI infrastructure spending may slow once the current wave of data center buildouts matures.

For now, the data supports the bulls. But with Samsung's earnings update due in four days and the memory cycle's duration increasingly debated, the KOSPI's rebound remains a bet on timing as much as conviction.

This article is for informational purposes only and does not constitute investment advice.