Seoul-based KB Securities raised its valuation targets on two South Korean memory industry leaders, citing a structural shortage in memory supply prompted by unprecedented AI infrastructure investment. The brokerage lifted its target for SK Hynix to 3,000,000 Korean won from 2,800,000 won while retaining a Buy rating, and upgraded Samsung Electronics to Buy with a new price objective of 450,000 won.
The firm’s outlook is driven by a belief that hyperscale AI investment has moved beyond a simple capital expenditure contest and become a broader struggle for AI infrastructure leadership. "For hyperscalers, AI investment is no longer a capex race; it is a race for AI infrastructure leadership, which could reshape the global economy, redefine industry leadership, and determine platform dominance," KB analyst Jeff Kim wrote.
KB’s note argues that hyperscalers will continue to spend heavily on memory and data center capacity until they secure sufficient infrastructure. "We expect AI investment to continue until sufficient memory capacity and data center infrastructure are secured," Kim added.
Demand dynamics
KB projects a sharp rise in AI-related usage at major cloud platforms, estimating that AI token usage at large cloud providers will increase roughly threefold over the next six months and about sevenfold year-on-year. The brokerage says this trajectory is turning memory capacity into an "increasingly urgent" constraint for hyperscalers.
According to the analysis, AI data center operators already take up around 70% of total memory shipments. Kim expects that demand will widen as agentic AI extends requirements beyond cloud servers to on-device and physical AI applications, pushing the share of memory consumption higher.
Supply outlook and pricing forecasts
On the supply side, KB highlighted that new memory production lines are not expected to reach mass production until after 2027. "The industry appears to be entering a de facto zero-supply era," Kim wrote.
Reflecting that view, KB projects a dramatic rise in average selling prices for 2026. For SK Hynix, the brokerage forecasts DRAM and NAND ASPs to climb 194% and 244% year-on-year, respectively. It expects Samsung to face similarly steep increases, with DRAM and NAND ASPs rising 297% and 256%.
Company-level projections for SK Hynix
KB’s forecast for SK Hynix includes a full-year 2026 operating profit of 277 trillion won, which the firm says would place the company fourth globally by that metric, and an operating margin of 78.1% - the highest in the world by KB’s reckoning. The brokerage expects second-quarter operating profit to surge to 70 trillion won, more than eight times year-on-year.
KB also noted a shift in SK Hynix’s commercial strategy toward long-term supply contracts running through 2028-2030. "Its shift toward long-term supply contracts through 2028-2030 increasingly resemble a foundry-like model of advance orders followed by production, reducing earnings volatility and improving earnings visibility - a key re-rating driver," Kim said.
Hyperscaler capex and broader market implications
Supporting KB’s bullish demand outlook is a marked acceleration in capital spending by major cloud operators. KB estimates combined capex from four large U.S. cloud providers - including Alphabet and Amazon - will reach $725 billion in 2026, up 77% year-on-year, before surpassing $1 trillion in 2027.
In KB’s view, large technology companies regard AI-related capital expenditure not simply as discretionary spend but as essential to maintaining competitiveness. "For big tech, AI capex is no longer a cost, but a survival barrier," Kim wrote, suggesting the current spending cycle has no near-term ceiling.
Conclusion
KB Securities’ revised targets and forecasts reflect a thesis that soaring AI-driven demand, concentrated consumption by hyperscalers, and delayed expansion of new production capacity will combine to create a pronounced tightness in memory markets. That combination underpins the brokerage’s elevated price targets for SK Hynix and Samsung Electronics and its view of an extended period of sharply higher memory prices.