[R&E] SK hynix at 1.4 Million Won & LS ELECTRIC Earnings Surprise... Strengthening Leadership in AI & Power Infrastructure

[R&E: Research & Epoch]
This is News Epoch's signature report that analyzes vast market data to overview a new era of investment.

Market Overview: Key Indicators and Trends

The U.S. stock market yesterday saw a mix of sector-by-sector fluctuations with a healthcare shock and an AI rally coexisting. UnitedHealth (UNH.US) plunged -19.61% on the forecast of declining sales, dragging down the Dow Jones Index, but the Nasdaq (+0.91%) and S&P 500 (+0.41%), which saw an influx of AI momentum, renewed their all-time highs. The Philadelphia Semiconductor Index also soared +2.40%, proving the dominance of tech stocks. On the macro side, the U.S. Consumer Confidence Index for January hit a 12-year low (84.5), and the dollar index plummeted to 95.756, reflecting concerns over an economic slowdown.

The domestic stock market, buoyed by net spot buying by foreign investors, saw the KOSPI record 5,084.85pt (+2.73%), settling safely above the 5,000-point mark. The index rise was led by large-cap semiconductor stocks such as SK hynix and Samsung Electronics, and the KOSDAQ also closed at 1,082.59pt (+1.71%), driven by policy expectations. Today's market is expected to be driven by strong earnings in the AI and power infrastructure sectors leading the bullish trend, but polarization by industry is expected to deepen further as poor performance is anticipated in the automobile sector, such as Hyundai Motor and Kia, which are exposed to the risk of President Trump's tariff hike (25%).

Core Issues and Insights by Industry

AI momentum is changing the landscape of the memory semiconductor industry and leading to a strong valuation re-rating. Citigroup raised its target price to 1.4 million won, defining SK hynix as a 'platform company' beyond a simple manufacturer, along with the forecast that it will exclusively supply HBM3E for Microsoft's AI accelerator 'Maia 200'. While the DRAM average selling price (ASP) is expected to rise by up to 111% in 2026, this trickle-down effect will spread to the backend substrate sector, and the 2026 operating profits of Korea Circuit and Haesung DS are forecast to surge by 151.7% and 119.1% year-on-year, respectively.

The acceleration of AI data center investments has proven the 'super cycle' of the power infrastructure market through earnings. LS ELECTRIC achieved an 'earnings surprise' that significantly exceeded consensus by recording a fourth-quarter operating profit of 130.2 billion won despite the reflection of one-off costs, and entered a structural growth trajectory by surpassing 5 trillion won in order backlog. Parent company LS Corp. is also expected to post a consolidated operating profit of 353.4 billion won in the fourth quarter thanks to the strong performance of its subsidiaries, and based on this, it is attracting market attention by announcing strong shareholder return policies such as raising its 2025 dividend per share (DPS) by more than 40% year-on-year.

Market Signals

• SK hynix Target Price Upgraded: Citigroup presented a target price of 1.4 million won based on the forecast of exclusive supply of HBM3E to Microsoft.

• LS ELECTRIC Earnings Surprise: Achieved its highest quarterly operating profit (130.2 billion won) and secured an order backlog of 5 trillion won due to a surge in data center power demand.

• Automobile Sector Geopolitical Risk: It is suggested that Hyundai Motor's 2026 operating profit consensus could be downgraded by -23% if Trump's tariff hike (25%) materializes.

Epoch View: Investment Implications

The market is showing a clear decoupling between technology stocks (AI & Power) with confirmed earnings and traditional manufacturing (Automobile) vulnerable to macro variables. Despite signals of an economic slowdown, the AI semiconductor and power infrastructure sectors continue to expand their valuations based on strong profit growth.

Therefore, a strategy to overweight AI infrastructure-related stocks (SK hynix, LS ELECTRIC, Korea Circuit), which are guaranteed high growth even after 2026, remains valid. On the other hand, a conservative approach is necessary for the automobile sector such as Hyundai Motor and Kia, where a trillion-won increase in costs is expected due to tariff hikes. For portfolio defense, a strategy to incorporate LS Corp., which has strengthened its shareholder return policy, or Samsung Securities, which is expected to yield high dividends, is required.

This content was written by analyzing public data from research centers of major domestic securities firms through News Epoch's proprietary AI algorithm. It is clarified that this is not a recommendation to invest in specific stocks.