Goldman Sachs: US investors are increasingly split on Korean memory stocks, but the firm still reiterates Buy on Samsung Electronics and SK Hynix

Overview

This report summarizes Goldman Sachs discussion and feedback from more than 30 US investors on Korean technology and the memory sector. Investor focus was concentrated on Samsung Electronics and SK Hynix, and US investors show more pronounced disagreement on storage-sector outlook than their Asian counterparts. Key debate topics include conventional memory and HBM pricing, the real enforceability of LTAs, 2027 price direction, potential incremental supply, China supply, SEC’s chance to gain share in HBM4, and relative preference between the two Korean memory leaders.

Core views

The core view is that although bears worry about decelerating storage price growth after 2Q26, further slowdown in 2H26, margins near historical peaks, LTA potentially marking a cycle top, and shifts in smartphone/PC demand and supplier capex toward more aggressive spending, Goldman Sachs remains constructive. The bull case is that earnings power this cycle is meaningfully higher than prior cycles, ROE is relatively more attractive than P/B, book value could compound quickly, and more binding LTAs could support demand and earnings visibility while reducing volatility, thereby justifying valuation rerating and higher shareholder returns.

Analysis framework

The report mainly uses investor feedback synthesis and company relative comparison, combined with pricing cycles, supply-demand balance, HBM competitive dynamics, LTA terms, valuation methodology, and risk scenarios, to assess the investment attractiveness of Samsung Electronics and SK Hynix.

Methodology notes

• Valuation methodsEV/EBITDA SOTP

  Samsung Electronics common stock target price

  Goldman Sachs uses a 12-month 2026E EV/EBITDA basis with an SOTP method, arriving at a Samsung Electronics common stock target price of W285,000.

• Valuation methodsPreferred stock discount model

  Samsung Electronics preferred stock target price

  The 12-month target price for Samsung Electronics preferred stock is W220,000, based on a 23% target discount to common stock derived from a two-factor discount model and the average one-month preferred-to-common discount.

• Valuation methodsP/B

  SK Hynix target price

  SK Hynix has a 12-month target price of W1,350,000, based on the average 2026E/2027E P/B and applying a target P/B multiple of 2.9x.

• factor frameworkGS Factor Profile

  Growth, financial returns, valuation multiples and composite percentile

  The GS factor framework measures growth through projected sales, EBITDA, and EPS growth, financial returns through ROE, ROCE, and CROCI, valuation multiples through P/E, P/B, P/D, EV/EBITDA, and EV/FCF, and combines growth, financial returns, and inverse valuation multiples into a composite percentile.

• M&A frameworkM&A Rank

  Takeover probability score

  Goldman Sachs uses an M&A Rank of 1 to 3 to assess take-private probability, where 1 is high, 2 is medium, and 3 is low; if the score is 1 or 2, an M&A component may be included in target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Samsung Electronics

  Core coverage name; Korean memory champion; SEC

  Strengths

  US investors are relatively more inclined toward SEC for reasons including higher earnings leverage from broader conventional memory exposure, the HBM catch-up story, potential upside in HBM4 share, and nearer-term upside in shareholder return policy.

  Weaknesses

  Investors continue to monitor its supply strategy, as the company has relatively more clean room capacity than peers, and more aggressive capex could impact industry supply-demand balance.

  Comparison

  Relative to SK Hynix, some investors see SEC as having stronger conventional memory earnings leverage and more immediate shareholder return catalysts.

  Risks

  Main downside risks include a material deterioration in storage supply-demand, a sharp contraction in smartphone margins, loss of mobile OLED share, and potential capacity expansion.

• SK Hynix Inc.

  Core coverage name; Korean memory champion; Hynix

  Strengths

  Investors preferring Hynix emphasize its higher beta, more attractive valuation given ROE relative to P/B, and potential valuation uplift from a potential ADR listing.

  Weaknesses

  Its HBM revenue and profits are more sensitive to AI capex, HBM demand, and Samsung’s progress in catching up in HBM.

  Comparison

  Relative to SEC, Hynix looks more like a high-beta and valuation-leverage name, but SEC was somewhat preferred in this round of US investor feedback.

  Risks

  Key risks include worsening storage supply-demand, delayed technology transitions, weakness in smartphone/PC/server demand, Samsung HBM progress exceeding expectations, and weakening AI-related capex.

• Korean memory industry

  Industry theme; shared exposure to Samsung Electronics and SK Hynix

  Strengths

  DRAM and NAND still have upside potential in near-term pricing, HBM pricing in 2027 may gain support from strong conventional DRAM, and stronger LTAs could improve demand and earnings visibility.

  Weaknesses

  Price growth is broadly expected to slow from 2Q26 and further in 2H26, and margin levels near historical peaks are constraining the upside narrative.

  Comparison

  US investors are more divided on the storage industry than Asian investors, suggesting a higher proportion of downside views on Korean memory stock price potential in the US market.

  Risks

  Demand destruction, additional supply in 2028, China DRAM and NAND supply, macro conflicts, oil prices, interest rates, and uncertainty around LTA terms.

Key data

• Number of investor interactions30+Goldman Sachs discussed Korean technology with over 30 US investors.
• Samsung Electronics common stock target priceW285,000Based on a 12-month 2026E EV/EBITDA SOTP valuation.
• Samsung Electronics preferred stock target priceW220,000Based on a 23% target discount to common stock.
• SK Hynix target priceW1,350,000Based on the average 2026E/2027E P/B and applying a target P/B multiple of 2.9x.
• Global rating distributionBuy 50%; Hold 34%; Sell 16%Goldman Sachs global equity coverage rating distribution disclosed in the appendix.
• Investment banking coverage distributionBuy 65%; Hold 60%; Sell 45%Investment banking relationship distribution disclosed in the appendix.
• LTA investor sentimentOverall negativeInvestors broadly believe LTAs often appear near the top of up-cycles in other industries, and customers in memory have exited LTAs historically.
• 2027 conventional storage price outlookMostly flat to modestly upInvestor views on 2027 prices are mixed, but most still expect a flat-to-slightly-up trajectory.

Impact & implications

The report indicates Korean memory stocks have moved into a higher-disagreement phase: rising prices and strong profitability underpin the bull case, but investors are testing cycle durability, LTA enforceability, and supply discipline more rigorously. If upcoming earnings calls or investor materials confirm LTA terms with prepayments, co-investments, or price floors, and if HBM and conventional DRAM pricing remain strong, the valuation rerating case could strengthen. Conversely, if prices turn down toward late 2026 or early 2027, or demand is dragged by macro weakness and weaker end demand, Korean memory shares could come under pressure from a cycle-top narrative.

Risks

• Material deterioration in storage supply-demand, especially if prices begin to decline month-over-month at the end of 2026 or early 2027.
• DRAM and NAND price growth slowing from 2Q26 and further in 2H26, weakening the case for further upside in stock prices.
• Margins are near historical peaks, with limited room for further expansion.
• LTA may not be sufficiently enforceable, and customer exits could trigger a downside cycle.
• Weakening demand for smartphones, PCs, and servers, which drags on conventional memory demand.
• Supplier capex becoming materially more aggressive, with risk of oversupply from new 2028 supply additions.
• Significant China DRAM and NAND supply could alter industry supply-demand expectations.
• A decline in AI-related capex could pressure HBM demand and related revenue and profits.
• Macro risks include Middle East conflict, elevated oil prices, and interest rate uncertainty.

What to watch

• Whether upcoming earnings calls from Korean memory peers disclose detailed LTA terms.
• Whether LTAs contain prepayments, co-investments, or price floors that can strengthen enforceability.
• The extent to which DRAM and NAND price growth slows in 2H26, and whether 2027 pricing stays flat to modestly higher.
• HBM4 ramp progress and SEC’s opportunity to gain share in HBM4.
• Whether 2027 HBM pricing negotiations are supported by a strong conventional DRAM price backdrop.
• Whether hyperscaler storage procurement activity remains robust.
• Whether clean room constraints continue to limit additional wafer capacity over the next 12 to 18 months.
• Whether incremental 2028 supply and China supply are sufficient to create excess risk in the industry.
• Samsung Electronics and SK Hynix shareholder return policy, including dividends and buybacks.
• Whether a potential ADR listing for SK Hynix delivers valuation upside.