Goldman Sachs has raised its valuations for two of South Korea's largest memory vendors, reflecting firmer pricing and a tighter supply backdrop as artificial intelligence workloads soak up a large share of available memory capacity. The bank increased its target on SK Hynix to 1.35 million won from 1.2 million won and lifted its Samsung Electronics target to 260,000 won from 205,000 won.
The broker said it boosted earnings estimates after revising upward its price forecasts for conventional DRAM and NAND memory. Goldman noted that early negotiations for second-quarter 2026 supply are taking place at price levels that are higher than what was anticipated a few months ago.
Goldman highlighted that supply is constrained across several end markets, including personal computers and smartphones, even though demand in those specific segments is not particularly strong. The firm said demand from AI servers is absorbing much of the available memory inventory, contributing to the tighter supply dynamics.
For SK Hynix, Goldman described the environment as among the strongest upcycles for conventional memory in several years. The bank now forecasts SK Hynix will report operating profit of 34.7 trillion won in the first quarter of 2026, and roughly 202 trillion won for the full year. Goldman also projects that the company could reach operating margins in the high-70% range for DRAM and the high-40% range for NAND during the year. The brokerage expects SK Hynix to retain its leadership in AI-oriented memory products, supporting a return on equity above 80%.
Goldman projected a substantial profitability improvement for Samsung Electronics as well. The firm expects Samsung to record operating profit of 40.3 trillion won in the first quarter and about 239 trillion won for 2026. That expected improvement reflects stronger memory pricing and growth in high-bandwidth memory used in AI computing. Goldman forecasts Samsung's operating profit to rise more than fivefold in 2026, with return on equity reaching roughly 37%.
Despite the more favorable outlook, the brokerage observed that both stocks continue to trade at relatively low valuations when measured against projected 2027 earnings. Goldman views those valuations as attractive in light of the anticipated increase in memory demand.
Sectors affected: semiconductor and memory manufacturing, data center infrastructure and equipment, personal computers and smartphones supply chains.