KB Securities Says Samsung Electronics, SK Hynix Undervalued, Sees Kospi Rebound by Year-End

Samsung Electronics Co. and SK Hynix Inc. have entered undervalued territory relative to earnings, and the Kospi could rebound in November and December, KB Securities said.

The benchmark index appears to have confirmed a W-shaped bottom after forming two troughs on July 29 and Oct. 15, KB Securities analyst Kim Dong-won said on Oct. 22. In his view, the market has passed the peak of investor concern.

KB Securities highlighted that earnings forecasts for chipmakers have held up despite the slide in share prices. The Kospi has fallen 37.1% over the past four months from its June 22 peak of 9,114, pushing its price-to-earnings ratio down to about four times. Based on projected earnings for next year, Samsung Electronics trades at 3.3 times earnings and SK Hynix at 2.7 times. Kim said the gap between earnings and share prices is at a historical low.

The brokerage also expects concerns over AI spending to ease gradually. Kim said worries about the financial health of neo-cloud companies such as CoreWeave had been priced in excessively, which should help reduce uncertainty over the sustainability of AI investment. He added that market focus will likely shift from interest rates to inflation, and from supply and demand dynamics to earnings. He also said the yield on the 10-year U.S. Treasury may have formed a short-term peak in the mid-5% range.

On the U.S. midterm elections on Nov. 3, Kim said the trend toward expanding AI infrastructure investment would continue regardless of the outcome. Both Republicans and Democrats share the strategic goal of securing a technological edge in the AI race with China, he said. Even if Democrats retain control of Congress, the broader national strategy of pursuing AI leadership is unlikely to change materially.

KB Securities said demand for AI servers remains solid and that demand for AI chips will exceed supply through 2028. Kim said a W-shaped rebound is expected to begin in November and December as the unusual gap between earnings and equity valuations narrows.