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Positive developments on multiple fronts

HBM-driven DRAM price increases likely to continue

We maintain our Buy rating and target price of W370,000 on Samsung Electronics (SEC). Recent updates from the company’s customers and competitors point to an increasingly favorable environment for both its operations and valuation. The stock is currently trading at a 12-month forward P/B of 1.7x and P/E of 4x, back at pre-AI boom levels. We view the current levels as a buying opportunity.

We forecast earnings to continue growing through next year, with operating profit reaching W120tr in 3Q26 and W559tr in 2027. We expect DRAM supply/demand conditions to remain tight through 2028, with price increases for HBM continuing to drive overall DRAM ASP growth. On top of stronger and more stable earnings, a series of positive developments are emerging that could support a valuation re-rating.

Positive developments across end-markets and competitors

Recent 2Q26 earnings calls confirmed continued growth in order backlogs among neocloud players. CoreWeave’s backlog expanded to US$104bn (+246% YoY), with another US$25bn in net new customer commitments added within the first few weeks of 3Q26. Nebius reported more than US$40bn in customer commitments, while Supermicro won more than US$60bn in new orders, pushing its backlog to an all-time high.

On Aug. 10, Nvidia announced partnerships with six financial institutions, including BlackRock, KKR, and Blackstone, to establish AI infrastructure financing platforms aimed at mobilizing over US$500bn in third-party capital. The planned platforms would channel capital from insurers, pension funds, and private credit into loans to data center operators, with equipment such as GPUs serving as collateral. Nvidia stated that it may provide residual-value support of up to 25% for certain transactions.

Intel recently raised US$20bn through a heavily oversubscribed equity offering to fund its foundry investments. This substantial capital commitment based on the potential value of leading-edge foundry capacity―despite the business having yet to generate meaningful earnings―is notable. We believe SEC’s foundry business could similarly undergo a re-rating as revenue from Tesla begins to materialize. In addition, recent pricing terms are believed to have become more favorable.

At its recent Investor Day event, Sandisk guided mid- to high-teen revenue growth and a 75% OP margin for FY2028?30, with plans to return 100% of excess cash to shareholders after funding business investments. This not only highlights the firm’s commitment to shareholder returns, but also underscores the memory business’s potential for sustainable cash generation.