[R&E] Memory Semiconductor Rally in Full Swing Driven by Surging AI Demand... Samsung Electronics Operating Profit Surges by 756%

[R&E: Research & Epoch] This is News Epoch's signature report that provides a perspective on the new era of investment by comprehensively analyzing global financial data and domestic securities firm research.

Global Market Brief

The New York stock market recorded an upward trend centered on tech stocks the previous day, amid mixed concerns over inflation and economic slowdown. The Dow Jones Industrial Average rose by 0.73%, and the S&P 500 Index increased by 0.81%, while the NASDAQ Index notably climbed by 1.03%. The strength of the semiconductor sector stood out. The Philadelphia Semiconductor Index surged by 4.23%, driving the overall market's upward momentum. This proves that expectations for increased semiconductor demand due to the spread of artificial intelligence (AI) technology have heightened.

U.S. economic indicators released on this day sent mixed signals. The April ISM Services Purchasing Managers' Index (PMI) stood at 53.6, slightly below the market expectation of 53.7, suggesting a potential slowdown in service sector activity. On the other hand, the services price index for the same period recorded 70.7, breaking the highest level since October 2022 and revealing that inflationary pressure remains high. The number of JOLTs job openings in March reached 6.866 million, exceeding expectations, and new home sales also demonstrated solid housing market demand at 682,000 units. The strength of the labor market and the vitality of the housing market show that the underlying fundamentals of the U.S. economy remain robust, but the signals of a service sector slowdown and high inflation indicators are points that require complex consideration in the Federal Reserve's (Fed) monetary policy decisions.

U.S. Treasury yields fell slightly. The 2-year Treasury yield dropped by 1.2bp from the previous day to 3.940%, and the 10-year yield fell by 1.4bp to 4.424%. International oil prices showed a downward trend in response to remarks about a possible ceasefire in the Middle East. The price of West Texas Intermediate (WTI) crude oil fell by 3.9% to record 102.3 dollars. This is the result of expectations for the easing of geopolitical risks being reflected in the raw materials market.

Domestic Market Overview

On the previous trading day, the domestic stock market recorded a positive trend driven by the global semiconductor rally and expectations of solid earnings from domestic companies. In particular, foreign investors net purchased 2.9 trillion won in the KOSPI market on May 4, setting the third-highest record in history. This reveals the high level of interest from overseas investors in the domestic stock market. Analysts indicate that this massive foreign buying spree flowed primarily into large-cap semiconductor stocks such as Samsung Electronics (005930) and SK hynix (000660).

The estimated operating profit for KOSPI-listed companies in 2026 was proposed at 867 trillion won, an increase of 182.5% from the previous year. This reflects the market's strong expectations for the earnings improvement of domestic companies and suggests that the global economic recovery and semiconductor industry improvement are acting as key drivers for the domestic stock market. The won/dollar exchange rate recorded 1,467.2 won, down 11.6 won from the previous day, showing signs of somewhat easing dollar strength pressure. This is expected to have a positive impact on the inflow of foreign capital. Despite inflation concerns and signals of an economic slowdown in the global stock market, the domestic stock market plans to continue its differentiated upward trend, supported by semiconductor-driven earnings momentum and foreign buying.

Key Industry Issues and Insights

The memory semiconductor industry has entered a structural growth phase, breaking away from past cyclical patterns, driven by the explosive surge in artificial intelligence (AI) demand. An IDC report forecast that the memory market will grow two to three times in the future due to increased AI demand. Against this backdrop, the stock prices and earnings indicators of major domestic and foreign semiconductor companies are recording notable upward trends.

Samsung Electronics saw its first-quarter 2026 sales increase by 69% year-on-year to 133.9 trillion won, while its operating profit surged by a staggering 756% to 57.2 trillion won. In particular, the operating profit margin for the DRAM sector recorded 78.0%, and the NAND sector recorded 65.4%, proving overwhelming profitability. This is the result of explosively growing demand for high-performance AI server memory, combined with price increase effects. Samsung Electronics is expected to continue its explosive growth in the second quarter, projecting sales of 158 trillion won and an operating profit of 81 trillion won. This earnings improvement clearly suggests the entry of the global memory market into a structural boom and solidifies its status as a core beneficiary in the AI era.

The strength of global memory companies also continued. Micron (NASDAQ: MU) surged by 11.1%, Intel (NASDAQ: INTC) by 12.92%, and AMD (NASDAQ: AMD) rose by 4.02%. Domestically, SK hynix (KS: 000660) climbed by 11% over 5 days, and Samsung Electronics (KS: 005930) increased by 5%, proving the powerful upward momentum across the semiconductor sector. Increased demand for high-performance computing stemming from AI technology advancements is driving profitability improvements for semiconductor companies across the board.

Semiconductor materials, parts, and equipment companies are also enjoying the benefits of the AI value chain expansion. SAMCNS (KOSDAQ: 252990) is estimated to achieve sales of 110.3 billion won and an operating profit of 30.2 billion won in 2026. In particular, the proportion of DRAM sales is projected to expand to 33% in 2026, and the company is proceeding with a large-scale production capacity expansion aiming for completion in the first half of 2027. KoMiCo (KOSDAQ: 183300) sees its cleaning and coating consignment production sales portion reach 35% and has secured major manufacturers such as Samsung Electronics (KS: 005930), TSMC (NYSE: TSM), and Intel (NASDAQ: INTC) as clients. Once the Tainan Plant 2 in Taiwan begins full-scale operations in July, business scalability in the global market is expected to be further strengthened.

On the other hand, Haesung DS (KS: 195870) saw its first-quarter 2026 operating profit fall short of market expectations by 38.6%, even though it surged year-on-year. It should be noted that even amidst the boom in the global semiconductor market, factors causing fluctuations in the profitability of individual companies still exist.

In the automotive industry, the strengthening of the global competitiveness of Korean companies stood out. With U.S. new car sales in April increasing by 4.8% year-on-year, Hyundai Motor (KS: 005380) and Kia (KS: 000270) recorded sales growth rates of 12.1% and 5.1%, respectively, achieving their highest April performances on record. Hyundai Motor also proved its growth trend in the Indian market, although domestic sales temporarily decreased due to disruptions in parts supply following a fire at a partner company.

In the transportation and shipping sector, Pan Ocean (KS: 028670) recorded an operating profit of 140.9 billion won in the first quarter of 2026, exceeding market expectations. The continued strength in ocean freight rates and efficient fleet operations supported the performance.

Market Signals

• Structural Changes in the Memory Market: It is highly likely that the memory market will grow two to three times due to increased AI demand, breaking away from past industry volatility. This suggests a change in the investment paradigm across the industry.

• Foreign Net Buying in the Domestic Stock Market: On May 4, a massive net buying of 2.9 trillion won occurred in the KOSPI market, breaking the record for the third-highest in history. The strong buying spree from overseas investors is confirmed.

• Rise in the ISM Services Price Index: The U.S. April services price index reached its highest level since October 2022, warning of inflationary pressures. This is a factor that increases uncertainty surrounding the Federal Reserve's interest rate policy.

• Drop in the Won/Dollar Exchange Rate: The won/dollar exchange rate fell by 11.6 won, easing the pressure from a strong dollar. A positive environment for foreign capital inflow is being created.

• Chinese Lithium Carbonate Prices: Lithium carbonate prices maintained the $25,263 level, forming the highest level since September 2023. Analysts suggest that the bottoming out of secondary battery material prices has begun in earnest.

Epoch View: Investment Implications

The global economy is facing a complex situation where inflationary pressures and economic slowdown signals coexist. However, the structural growth of the semiconductor industry driven by the spread of AI technology and the solid earnings of major companies are key drivers supporting the market's downside. In particular, the South Korean stock market is highly likely to show a differentiated trend, coupled with the overwhelming earnings momentum of the semiconductor sector led by Samsung Electronics (KS: 005930) and the strong inflow of foreign funds. Despite the uncertainty of the global macroeconomic environment, the advent of the AI era is providing a definitive growth engine for the manufacturing-centered Korean economy.

This content was generated through News Epoch's proprietary AI algorithm, which tracks and analyzes public data from research centers of major domestic securities firms and global financial media in real-time. It is an objective summary based on collected data and does not constitute a solicitation or recommendation to invest in any specific stock.