[R&E] AI HBM Mega Cycle Ignites, SK Hynix OP at Record High of 19.2 Trillion Won... KOSPI and KOSDAQ Record High Rally Continues

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

Market Overview: Key Indicators and Trends

The New York stock market closed mixed the previous day as it digested the FOMC results and earnings of big tech companies, but the S&P 500 index maintained a strong trend, hitting a new record high on a closing basis. At the January FOMC, the US Federal Reserve held its policy rate steady at 3.75%, maintaining the current tightening stance, but upgraded its assessment of economic activity from "moderate" to "solid," confirming a stable economic flow. The Fed specified the point when the impact of tariff inflation eases as a key condition for resuming rate cuts, increasing the likelihood that the timing of rate cuts will be delayed to the second half of the year. However, the upward trend centered on large-cap tech stocks remains robust. In particular, AI-related analog semiconductor demand has driven Texas Instruments (NASDAQ: TXN)'s data center revenue to grow for eight consecutive quarters, demonstrating that AI demand is driving the need for entire server rack components.

On the previous trading day, the domestic stock market, buoyed by its linkage to the strength of US tech stocks, saw the KOSPI record 5,170.81 (+1.69%) and the KOSDAQ hit 1,133.52 (+4.70%), with both indices continuing their record high rally. In particular, the KOSDAQ significantly outperformed the KOSPI due to concentrated buying in growth sectors such as bio and secondary batteries. Behind this stock market strength lies powerful liquidity, as domestic investor deposits surpassed 100 trillion won for the first time in history, representing a strong money move phenomenon in the market. This liquidity is showing a pattern of intensive inflow into large-cap growth sectors such as semiconductors, bio, and robots. Today's market is expected to see continued strength centered on tech stocks led by AI and memory industry improvements, and positive market reactions are anticipated for companies that announced earnings surprises and preemptive shareholder return policies.

Core Industry Issues and Insights

The AI-based HBM (High Bandwidth Memory) mega cycle is being overwhelmingly confirmed through fourth-quarter earnings announcements. SK Hynix achieved record-high earnings, posting 32.8 trillion won in revenue and 19.2 trillion won in operating profit in 4Q25. This is due to overwhelming cost competitiveness from the expansion of its HBM product mix, and it proved structural high profitability with DRAM operating profit margins approaching 70%. Furthermore, by unveiling a shareholder return package worth 14.3 trillion won (including 12.2 trillion won in treasury stock cancellation), it expressed strong confidence in the memory upcycle expected to last until 2Q27. AI semiconductor supply chain companies are also benefiting. Although Isu Petasys saw its short-term earnings fall below consensus due to a change in revenue recognition method (VMI), a structural ASP (Average Selling Price) increase is expected based on its world-class market share as the application of the Sequential process is confirmed for the next-generation TPU 8th generation.

The automotive and mobility sectors saw mixed results due to the impact of US tariffs. Kia recorded a 4Q25 operating profit of 1.84 trillion won, down 32% year-on-year, which is the result of the direct impact of export tariffs to the US (1.02 trillion won). Nevertheless, Kia confirmed its solid fundamentals by proposing a 2026 wholesale sales target of 3.35 million units (YoY +6.8%) and an operating profit of 10.2 trillion won. Hyundai Mobis also saw its profit margin decline due to quality costs and tariff impacts, but it successfully defended its performance by recovering most of the 4Q25 parts tariff costs and appears to be strengthening its future growth engines by securing new orders for large-scale North American electrification projects (around $6.5 billion). Meanwhile, the US-based GM (NYSE: GM) carried out portfolio optimization reflecting a total loss of $6.0B in the EV sector, while simultaneously raising its 2026 EPS guidance and announcing a $6 billion share repurchase plan, showing its determination to focus on long-term profitability improvement.

In the refining, chemical, and materials sectors, the resolution of uncertainties and the rise in the value of critical minerals are key issues. SK Innovation recorded a massive net loss in 4Q25 as it reflected an impairment loss of 4.2 trillion won due to the termination of its joint venture with Ford (BlueOval SK). This is interpreted as a large-scale 'Big Bath' to clean up the pessimistic operating environment in the battery division, and in 2026, company-wide operating profit is projected to surge by 580% to 2.67 trillion won, driven by strong refining margins and favorable lube operations. In addition, in the critical minerals market, silver prices have skyrocketed by about 161% compared to 2025, boosting the value of related companies. With tightening supply controls, such as the US officially designating silver as a critical mineral and China introducing an export licensing system, Korea Zinc anticipates an operating profit of 1.5 trillion won in 2026 based on its strong 4Q25 performance, and is accelerating its plans to produce 11 types of critical minerals through the 'Crucible Project' in the US.

Market Signals

• AI HBM Confirmed: SK Hynix achieved record-high earnings, posting a provisional operating profit of 19.2 trillion won in 4Q25. This proves that the high-value product portfolio centered on HBM is generating overwhelming margins even in a high-interest-rate environment.

• Liquidity Surge: Domestic investor deposits surpassed 100 trillion won for the first time in history. This signifies that the money move toward investment products with expected high returns is accelerating, and it is judged to act as additional upside potential for the domestic stock market.

• Deepening Critical Mineral Scarcity: Silver prices skyrocketed by about 161% compared to 2025, surpassing $100 per ounce. This is the result of US policy changes and strengthened supply controls combined with chronic supply shortages, acting as a factor to raise the long-term target prices of companies securing critical minerals like Korea Zinc.

Epoch View: Investment Implications

The current market is undergoing structural changes driven by new growth engines like AI, moving beyond simply entering an economic recovery phase. The criteria for evaluating corporate performance are becoming more sophisticated, shifting from absolute growth rates to capital efficiency and the ability to return value to shareholders. The fact that SK Hynix presented a shareholder return package worth 14.3 trillion won alongside its record-high earnings is a clear response to these market demands.

While market liquidity (deposits surpassing 100 trillion won) remains abundant as the rate freeze stance is maintained, the concentration toward specific stocks or sectors is intensifying. Therefore, a long-term approach is valid for companies that have resolved uncertainties by reflecting temporary costs despite solid fundamentals—for example, companies like SK Innovation that have preemptively removed financial risks through large-scale impairment processing. In addition, just as LG Display succeeded in turning an annual profit for the first time in four years through its OLED transition and cost reductions, companies that have successfully completed business fundamentals improvement are also judged to be in an advantageous position to secure medium- to long-term momentum. In a situation where the market's peak rally continues, managing volatility requires a condensed strategy within leading sectors that have secured core technological superiority and proven pricing power.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from the research centers of major domestic securities firms in real time.
It is an objective summary based on collected data and is not an investment solicitation or recommendation for specific stocks.