Morgan Stanley Cuts SK hynix Target 38% to ₩1.6M, Nomura Holds ₩4.7M: The 2028 Memory 'Earnings Cliff' Debate
📌 The 2028 "Earnings Cliff" Debate at a Glance
The first two cards are broker opinions; the third is a company disclosure as reported by The Korea Herald.
Two global banks looked at the same memory boom this month and came up with price targets nearly three times apart. On Nov 9, Morgan Stanley cut its SK hynix target by 38% to ₩1.6 million and its Samsung Electronics target by 19% to ₩309,000, warning of a possible 2028 "earnings cliff" (Yonhap, Nov 10). Nomura kept its targets at ₩4.7 million and ₩670,000, arguing that memory shortages last at least through 2028 (Korea Herald, Nov 11). Both banks expect record profits next year; they disagree about what comes after. Here is what each side said and why it matters.
1. What Happened: Morgan Stanley Raises 2027, Cuts the Long Run
Reported FactsIn a Nov 9 report, Morgan Stanley analyst Shawn Kim cut SK hynix's target from ₩2.6M to ₩1.6M, Samsung's from ₩381,000 to ₩309,000 and Samsung's preferred shares from ₩304,800 to ₩247,200 (Yonhap, Nov 10). "The most important debate in the memory market right now is whether we can avoid a 'cliff in earnings' in 2028," Kim wrote (Korea Herald).
Reported FactsNear-term numbers went the other way: Morgan Stanley raised its 2027 operating profit forecasts by 9% for Samsung, to about ₩688 trillion, and by 13% for SK hynix, to about ₩468 trillion. What changed was the long run: SK hynix's average operating margin for 2029–2035 was cut from 53% to 28%, and the 2027–28 HBM margin assumption from 78–80% to about 70% (Samsung: from about 80% to 65–72%) (Yonhap; eToday, Nov 10).
Morgan Stanley's bear-case chain (Yonhap, Korea Herald). Forecasts, not outcomes.
Reported FactsThe key input is data-center timing. Morgan Stanley moved about 4.9 GW of capacity expected in 2028 into 2029, which cuts its forecast for growth in annual global data-center additions that year from 21% to 9%. Additions would still reach 43.3 GW in 2028, but new memory capacity from late 2027 could catch up with demand. More Chinese output and smaller HBM premiums add risk (Korea Herald). Even so, the bank kept Overweight on both stocks and made Samsung its top semiconductor pick, replacing Samsung Electro-Mechanics. It cited a TrendForce forecast that Samsung's 2027 HBM share reaches about 39%, ahead of SK hynix at 37% (Yonhap).
2. The Bull Case: Nomura Sees Shortages Through 2028
Reported FactsNomura kept its Buy ratings and its ₩4.7M and ₩670,000 targets in a report last Thursday (Korea Herald). Its Oct 19 memory report, built on data-center forecasts and memory per system, concluded that demand growth would beat supply growth "at least through 2028." It expects annual data-center additions to rise from 22.3 GW in 2026 to 31.5 GW in 2027, and argued that stricter US permitting will more likely delay or relocate projects than cancel them. In September it said Chinese makers have limited room to add output before 2028 and that customers are signing five-year LTAs with price caps up to 20% above current prices (Electronic Times, Sep 4).
| Item | Morgan Stanley (Nov 9) | Nomura (latest) | Source |
|---|---|---|---|
| SK hynix target | ₩1.6M (from ₩2.6M) | ₩4.7M (maintained) | Yonhap; Korea Herald |
| Samsung target | ₩309,000 (from ₩381,000) | ₩670,000 (maintained) | Yonhap; Korea Herald |
| Rating | Overweight (both) | Buy (both) | Yonhap; Newsis |
| Implied upside vs Nov 11 close* | SK hynix +25%, Samsung +50% | SK hynix +268%, Samsung +225% | Our calculation |
| Shortage view | Supply catches up from late 2027 | Demand beats supply "at least through 2028" | Korea Herald |
| Data-center capacity | ~4.9 GW slips 2028 → 2029; 2028 additions 43.3 GW | 22.3 GW (2026) → 31.5 GW (2027) additions | Korea Herald |
*Our arithmetic using Nov 11 closes of ₩1,277,000 (SK hynix) and ₩206,000 (Samsung) from Seoul Economic Daily. Price targets are 12-month broker opinions.
Chart: Morgan Stanley's old and new targets and Nomura's target vs the Nov 11 close, for SK hynix and Samsung. Sources: Yonhap, Korea Herald, Seoul Economic Daily.
💡 Market Analyst Takeaway
AnalysisThe gap is about the terminal margin, not 2027. Do memory margins fall back toward historical levels after 2028, or does AI demand keep the industry structurally tighter? Morgan Stanley's cut to the 2029–35 margin, not any near-term miss, drives most of its 38% move.
AnalysisShawn Kim's past "winter" calls in 2021 and 2024 moved the stocks. But even his new targets sit about 25% (SK hynix) and 50% (Samsung) above the Nov 11 close, and both Overweight ratings stay. We read this report as a warning about multiples rather than a sell signal. SK hynix's LTAs covering over half of 2027–28 capacity soften volume risk, but they price "within a price range agreed upon with customers," so a price downturn would still reach earnings.
3. How the Market Reacted
Reported FactsThe day after Korean media reported the cut, Korean chips rebounded. On Nov 11, SK hynix closed up 5.36% at ₩1,277,000 and Samsung rose 3.57% to ₩206,000, while the KOSPI gained 2.60% to 5,375.36. Seoul Economic Daily credited CoreWeave's Q3 revenue (+168% to $3.66 billion) and Anthropic's Nov 19 Nasdaq listing. KB Securities' Kim Dong-won said US regulation is unlikely to reduce AI infrastructure investment through 2028 (Korea Herald). Morgan Stanley noted that forward earnings estimates for the Philadelphia Semiconductor Index rose 24% in the downturn while the forward P/E fell 51%.
AnalysisRising estimates and shrinking multiples are the "cliff" debate in market form: investors already price a cyclical peak. If 2028 builds hold up, the discount looks too steep; if they slip, pressure shows up first in contract prices and HBM premiums.
4. What to Watch Next
- Anthropic's Nov 19 listing and hyperscaler funding, a read on AI funding appetite.
- US data-center permitting: delay, relocation or cancellation is the core disagreement.
- Contract and HBM pricing for 2027–28.
- Q4 results and 2027 CapEx plans in January, for late-2027 supply.
Related coverage: SK hynix and Samsung at 3x earnings: record profits meet the cheapest valuations since 2020, Blue wave hits Korea chips as US data-center rules scare HBM demand, and SK hynix's Q3 2026 beat and ₩100T return plan.
Check the Primary Sources
Long-term agreements, results and guidance are on the official IR sites.
🔍 SK hynix Official IR: Results & Disclosures 📊 Samsung Electronics Official IR
Comments
Post a Comment