Related context: this is a follow-up to AI token value and memory value added, Samsung 2Q26 signals and noise, late-July Big Tech earnings and the memory thesis, and Micron FY3Q26 AI memory review. Relevant hubs are the Exclusive Analysis Hub and the AI HBM Hub.
TL;DR
Samsung Electronics and SK Hynix look very cheap on 2028E net income. If we use MarketScreener aggregate estimates, 2028E net income is about KRW 439.8tn for Samsung and KRW 346.6tn for SK Hynix. Applying a 9 to 12x P/E gives fair market caps of KRW 3,958tn to 5,277tn for Samsung and KRW 3,119tn to 4,159tn for SK Hynix.
Against current market caps, that implies roughly +120 to +193% for Samsung and +104 to +172% for SK Hynix. The market is valuing them at only about 4.1x and 4.4x 2028E P/E, respectively.
But the bottleneck is not the multiple. It is the 2028E profit number. If 2028 earnings are normalized, both stocks are cheap. If 2028 is the cycle peak, a 4 to 5x P/E may not be cheap.
| Item | Samsung Electronics | SK Hynix |
|---|---|---|
| MarketScreener 2028E net income | KRW 439.8tn | KRW 346.6tn |
| 9 to 12x fair market cap | KRW 3,958tn to 5,277tn | KRW 3,119tn to 4,159tn |
| Current implied 2028E P/E | About 4.1x | About 4.4x |
| Scenario-weighted 2028E net income | About KRW 272tn | About KRW 208tn |
| Scenario-weighted 9 to 12x fair market cap | KRW 2,444tn to 3,258tn | KRW 1,876tn to 2,502tn |
| Scenario-weighted upside | About +36 to +81% | About +23 to +64% |
The stronger relative setup is Samsung. SK Hynix has higher-quality HBM earnings, but more of that quality is already embedded in the price. Samsung has HBM catch-up, commodity DRAM/NAND leverage and a lower implied 2028E P/E.
1. Current Coordinates
Samsung’s net income belongs economically to both common and preferred shares, so the right denominator is total equity value, not common-share market cap alone. Depending on the public screen, Samsung market cap appears around KRW 1,753tn, while a common-plus-preferred equity value framework is closer to KRW 1,800tn. SK Hynix is around KRW 1,530tn.
| Item | Samsung Electronics | SK Hynix |
|---|---|---|
| Reference share price | KRW 274,000 to 274,500 | KRW 2,151,000 to 2,160,000 |
| Analysis market cap | About KRW 1,800tn | About KRW 1,530tn |
| 2026E OP reference | KRW 371tn to 381tn | KRW 280tn to 291tn |
| 2027E OP reference | KRW 500tn to 574tn | KRW 379tn to 432tn |
Samsung guided to 2Q26 revenue of KRW 171tn and operating profit of KRW 89.4tn. SK Hynix reported 1Q26 revenue of KRW 52.576tn, operating profit of KRW 37.610tn and net income of KRW 40.346tn, with operating margin of 72%.
Using net income as roughly 75% of operating profit, current prices imply 2026E P/E near 6 to 7x and 2027E P/E near 4 to 5x. The market is not treating these companies as secular growth stocks. It is treating them as memory companies at or near peak earnings.
2. The Point-Estimate Valuation
MarketScreener aggregate estimates put 2028E net income at KRW 439.781tn for Samsung and KRW 346.562tn for SK Hynix. The same dataset puts 2028E EBIT at KRW 543.635tn and KRW 423.866tn, respectively.
| KRW tn | 2028E net income | 9x fair cap | 10x fair cap | 12x fair cap | Current cap | Upside |
|---|---|---|---|---|---|---|
| Samsung Electronics | 439.8 | 3,958 | 4,398 | 5,277 | About 1,800 | +120% / +144% / +193% |
| SK Hynix | 346.6 | 3,119 | 3,466 | 4,159 | About 1,530 | +104% / +127% / +172% |
This simple calculation says both stocks are cheap. It also says Samsung is slightly more asymmetric because its implied 2028E P/E is lower.
The danger is that 2028E is still far away. Memory cycles have repeatedly produced large peak profits that later collapsed. Therefore, the real question is whether 2028E is a normalized profit base or a peak.
3. How to Estimate 2028E
Extending 2027E mechanically is not enough. A top-down “AI capex keeps rising, so memory profit rises” approach is also too thin. Memory profits are often set by supply, not demand. The 2028 supply base is already being shaped by 2026 to 2027 capex.
The better process is:
| Step | What to do | Why it matters |
|---|---|---|
| 1 | Split profits into contracted HBM, non-contracted HBM/server DRAM, and spot DRAM/NAND | Each bucket has a different earnings floor |
| 2 | Track supply instead of forecasting it abstractly | 2027 capex determines 2028 bit supply |
| 3 | Segment demand into AI servers, general servers and consumer devices | Price elasticity differs sharply |
| 4 | Force memory-cycle base rates into the model | Peak-year earnings historically fall hard |
| 5 | Use scenario distributions and reverse implied earnings | Current price already embeds a view |
The single most useful future disclosure would be the 2028 HBM long-term agreement coverage ratio. If a large share of 2028 shipment is already contracted, the 2028 profit floor is much higher than in historical cycles.
The main supply variables are 2027 capex guidance, equipment orders from ASML/AMAT/TEL, Hynix’s Yongin and Cheongju investments, Samsung’s HBM and packaging catch-up spending, CXMT and YMTC expansion, and whether HBM bottlenecks remain in stacking and packaging rather than wafers alone.
Demand must also be segmented. AI server demand is relatively inelastic. General server demand is cyclical. PC and smartphone memory demand is price-sensitive and can already show demand destruction when memory prices rise too quickly.
Historical base rates are harsh.
| Cycle | Operating profit change |
|---|---|
| Samsung consolidated 2018 to 2019 | -53% |
| Samsung DS 2018 to 2019 | -69% |
| SK Hynix 2018 to 2019 | -87% |
| 2023 memory downcycle | Loss-making episodes |
This cycle deserves an upward adjustment because of HBM contracts, oligopoly structure, wafer cannibalization by HBM and low AI-server price elasticity. But it also deserves caution because of Chinese supply, consumer demand destruction, policy-driven capacity expansion and the statistical extremity of 70%+ operating margins.
4. Scenario Valuation
| Scenario | Probability | Samsung 2028E NI | 9x | 12x | Upside | SK Hynix 2028E NI | 9x | 12x | Upside |
|---|---|---|---|---|---|---|---|---|---|
| S1 shortage persists | 25% | KRW 420tn | 3,780 | 5,040 | +110 to +180% | KRW 315tn | 2,835 | 3,780 | +85 to +147% |
| S2 soft landing | 45% | KRW 280tn | 2,520 | 3,360 | +40 to +87% | KRW 215tn | 1,935 | 2,580 | +26 to +69% |
| S3 hard landing | 30% | KRW 135tn | 1,215 | 1,620 | -32 to -10% | KRW 110tn | 990 | 1,320 | -35 to -14% |
| Probability-weighted | - | KRW 272tn | 2,444 | 3,258 | +36 to +81% | KRW 208tn | 1,876 | 2,502 | +23 to +64% |
MarketScreener’s estimate sits closer to S1. The probability-weighted model blends S2 and S3 risks. These two approaches do not conflict. One shows how cheap the stocks are if consensus is right. The other shows how much risk discount should be applied to that consensus.
5. What the Current Price Already Embeds
Reverse the current market caps by a 9 to 12x P/E and we get the 2028E net income implied by today’s prices.
| Item | Current cap | Implied 2028E NI at 9x | Implied 2028E NI at 12x |
|---|---|---|---|
| Samsung Electronics | About KRW 1,800tn | About KRW 200tn | About KRW 150tn |
| SK Hynix | About KRW 1,530tn | About KRW 170tn | About KRW 127tn |
Against rough 2027E net income estimates, current prices already imply a meaningful drop.
| Item | Rough 2027E NI | Implied 2028E NI | Implied decline |
|---|---|---|---|
| Samsung Electronics | About KRW 400tn | KRW 150tn to 200tn | -50 to -63% |
| SK Hynix | About KRW 310tn | KRW 127tn to 170tn | -45 to -59% |
This is the key reframing. The current bet is not necessarily that 2028 earnings will be spectacular. It may simply be that the decline from 2027 will be shallower than the 45 to 63% decline already embedded in prices.
6. Samsung Versus SK Hynix
| Company | Core thesis | Risk |
|---|---|---|
| Samsung Electronics | Lower implied 2028E P/E, HBM catch-up, commodity DRAM/NAND leverage | HBM4 delay, foundry/system LSI losses, weaker reported-to-core profit conversion |
| SK Hynix | Highest-quality HBM profit pool, customer reference, strong margin | More optimism embedded, ADR/event flow, need to prove 2028 LTA coverage |
Samsung is not the HBM leader, but that is partly the point. Expectations are lower. If HBM4 qualification, yield and allocation improve, the stock gets both earnings revision and multiple repair. Samsung also has more leverage to conventional DRAM and NAND pricing.
SK Hynix has the cleaner HBM exposure and better current profit quality. But the market already gives it more credit for structural HBM change. The stock needs clearer evidence that 2028 profit is contracted and not just a peak-cycle extrapolation.
7. Practical Stance
| Stock | Stance | Reason | What to confirm |
|---|---|---|---|
| Samsung Electronics | Hold-biased, pullback candidate | More asymmetric 2028E valuation and catch-up optionality | July 30 segment data, HBM4 progress, NAND/DRAM pricing |
| SK Hynix | Watchlist, no event-chasing | Best HBM quality, but more expectation embedded | ADR absorption, 2Q call LTA coverage, HBM4 premium |
For Samsung, selling aggressively here requires assigning a very high probability to a 2028 hard landing. The data does not yet justify that. For SK Hynix, the company quality is clear, but ADR, new-share absorption and 2028 contract visibility matter before chasing.
8. Invalidation
The thesis weakens if two or more of the following happen.
| Invalidation signal | Meaning |
|---|---|
| 2027 capex across the three major memory firms rises more than 50% YoY | Supply discipline breaks |
| CXMT qualifies high-end server DDR5 with major customers | Commodity DRAM ceiling falls |
| Chinese suppliers make visible HBM progress | Premium durability weakens |
| Big Tech capex guidance slows sharply | AI server demand downside |
| No disclosure or evidence of 2028 HBM LTA coverage | Peak-profit discount remains |
| YMTC NAND ramp accelerates | NAND pricing risk |
Final View
Samsung and SK Hynix both look cheap on 2028E earnings. But cheap-looking is not the same as cheap.
Using MarketScreener point estimates, both have roughly double-like potential. Using a supply, contract and base-rate scenario model, the upside narrows to +36 to +81% for Samsung and +23 to +64% for SK Hynix. That is still attractive, but the margin of safety is smaller.
The key is 2028E. It cannot be built from demand stories alone. It depends on HBM LTA coverage, 2027 capex discipline, DRAM/NAND pricing, Chinese supply and Big Tech capex.
The relative preference is Samsung. SK Hynix has better HBM earnings, but requires more belief. Samsung has catch-up optionality, broader DRAM/NAND leverage and a lower implied 2028E P/E. For both names, the next checks are late-July Big Tech capex, Samsung’s July 30 detailed results, SK Hynix ADR absorption and the 2Q call.
Evidence and Limits
| Classification | Content |
|---|---|
| Fact | Samsung 2Q26 preliminary revenue KRW 171tn and OP KRW 89.4tn. SK Hynix 1Q26 revenue KRW 52.576tn, OP KRW 37.610tn and net income KRW 40.346tn. MarketScreener 2028E net income of KRW 439.781tn for Samsung and KRW 346.562tn for SK Hynix |
| Inference | Net income approximated at 75% of OP. Current prices imply 2028E net income of KRW 150-200tn for Samsung and KRW 127-170tn for SK Hynix |
| Speculation | Scenario probabilities and 2028E net income assumptions: S1 25%, S2 45%, S3 30% |
| Blocked | 2028 HBM LTA coverage, customer allocations, actual contract prices and detailed analyst-by-analyst 2028E assumptions are not fully available from public data |