Are Korean stocks oversold? Samsung and SK Hynix fall sharply despite record profits

In Brief

• SK Hynix and Samsung Electronics delivered record second quarter results, supported by surging memory prices and exceptionally strong margins. However, SK Hynix still missed expectations, sending its shares sharply lower.
• The KOSPI has fallen almost 40% from its June peak, as investors question whether record AI spending is translating into returns quickly enough.
• Memory supply remains tight, with Samsung and SK Hynix largely sold out for 2026 and limited new capacity expected before 2027.
• However, the pace of memory price increases is expected to slow in the third quarter, prompting investors to lower near term expectations despite the continued shortage.
• The sell off has pushed the KOSPI’s forward valuation to levels last seen around the global financial crisis.
• In this update, we explain why the correction appears to reflect a repricing of expectations rather than a breakdown in the memory cycle, and what we are watching next.