Samsung Electronics, SK Hynix Trade Flat Ahead of US Big Tech Earnings

Alphabet reports on July 22, followed by Microsoft and Meta on July 29 and Amazon on July 30

Samsung Electronics Co. and SK Hynix Inc. traded in a narrow range early on July 21 as investors awaited earnings from major US technology companies.

As of 9:10 a.m., Samsung Electronics was down 500 won, or 0.2%, at 243,500 won. SK Hynix fell 1.59% to 1.736 million won. Both stocks briefly turned higher earlier in the session, with Samsung rising about 0.2% and SK Hynix gaining about 1.4%, before reversing course.

Alphabet will kick off earnings from US hyperscalers, or operators of massive data centers, on July 22. The muted trading in the two Korean chipmakers reflects investor caution as the market looks for signs on whether those companies will expand capital spending.

Alphabet reports on July 22. Microsoft and Meta are scheduled to post results on July 29, followed by Amazon on July 30.

Hana Securities said Alphabet has not missed market expectations for quarterly earnings per share since last year. When the company delivered a revenue surprise, Samsung Electronics and SK Hynix posted average one-month returns of 11% and 17%, respectively.

When Alphabet's earnings failed to meet expectations, the average returns were 2% for Samsung Electronics and minus 3% for SK Hynix. Micron Technology Inc. and Taiwan Semiconductor Manufacturing Co. shares showed a similar pattern, according to Hana Securities.

The companies' capital expenditure plans will also serve as a barometer for future demand for AI infrastructure investment.

Combined capital expenditures by Alphabet, Microsoft, Meta and Amazon are forecast at $725 billion this year and nearly $900 billion next year.

Hana Securities expects the combined capital expenditure growth rate for the four companies to rise from 80% in the first quarter to 83% in the second quarter and 92% in the third quarter. Although the fourth-quarter estimate eases to 79%, the brokerage said the absolute growth rate remains high, which should help sustain strong operating margins for South Korea's semiconductor sector for the time being on the back of robust downstream investment demand.

Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com