Huo Xing Finance reports that on August 4, HSBC, in its latest report, departed from traditional P/E valuation and instead reverse-engineered the long-term earnings expectations implied by Samsung Electronics’ current stock price. Based on consensus earnings forecasts over the next three years, 100,000 Monte Carlo simulations were conducted to identify a 15-year earnings trajectory consistent with the current share price. The conclusion reveals that the market has truly downgraded the long-term AI-driven earnings outlook for Korean memory chip stocks. Samsung Electronics emerged as the most extreme case: its stock price has fallen approximately 25% from its early June high, with the implied earnings cycle shrinking from about 3.5 years to 2.5 years, and the implied trend EPS relative to 2024 levels plunging from roughly 2x to just 0.8x—effectively erasing nearly all AI-related long-term premium. The implied CAGR for EPS from year three to year nine further declined from approximately -15% to -35%, hitting a historic low—indicating that the market not only doubts the sustainability of this AI-driven upcycle but also expects Samsung’s profitability after the cycle to fall below its 2024 levels prior to the AI boom. SK Hynix experienced an even more severe adjustment: its stock price has dropped 37% since its June 25 high, with the implied earnings cycle collapsing from about 6 years to 2.7 years, and long-term trend earnings falling from approximately 6x the 2024 level to just 2x; HSBC considers this decline “overly pessimistic.” In contrast, TSMC’s implied earnings cycle remains at approximately 7.4 years, with long-term trend earnings at about 2.3x the 2024 level, indicating that the market still believes AI can deliver earnings growth that transcends cyclical fluctuations. The pricing divergence between Korean memory stocks and TSMC has become the most distinctive feature of this correction. On the funding side, foreign investors have net sold approximately $150 billion in Samsung, Hynix, and TSMC year-to-date, with about $60 billion sold since June; previously leveraged single-stock ETFs that amplified volatility have seen their AUM drop from around $37 billion at the end of June to $12 billion, with their trading volume as a share of total daily turnover on volatile days clearly declining. HSBC believes that the most damaging mechanical selling pressure is subsiding; the core issue now is not whether AI demand exists, but whether stock prices have priced in an overly pessimistic compression of the AI cycle.
HSBC: Samsung Electronics' Pricing Reflects No AI Premium, Long-Term Earnings Seen at 2024 Levels
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Summary
HSBC’s latest daily market report indicates that Samsung Electronics’ stock price shows no AI premium, with long-term earnings projected to remain at 2024 levels. A Monte Carlo analysis suggests that expected EPS growth could decline between -15% and -35% over years three to nine. Samsung’s stock has fallen 25% from its June high, while SK Hynix dropped 37%. Foreign investors have net sold $1.5 trillion worth of shares in Samsung, SK Hynix, and TSMC this year, with leveraged ETFs contracting sharply. Traders are now shifting their focus to altcoins amid broader market uncertainty.
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