Seoul shares sharply up late Tue. morning on tech rally, lower oil prices

SK Hynix (000660) shares rose 6.7% to 1,212,000 won, leading a recovery in Korean semiconductor stocks after last week's decline. The surge followed reassessment of U.S. regulatory fears, government reassurance on domestic expansion, and mixed analyst outlooks. The KOSPI index also gained 4.4%, supported by U.S. tech strength and lower oil prices. Morgan Stanley cut SK Hynix's price target by 38% to 1.6 million won, citing potential long-term profit challenges.

Morgan Stanley cut target prices for Samsung Electronics (down 19%) and SK Hynix (down 38%) due to expected memory supply expansion post-2028, contrasting Nomura's higher targets. Morgan Stanley raised short-term profit forecasts but expects lower margins long-term. Both stocks remain 'overweight' rated.

AMD and Google are capitalizing on Nvidia's leadership crisis, driven by CEO Jensen Huang's scandal. AMD, with a 7% AI accelerator market share, saw its stock rise 13% after Oppenheimer set a $600 target. Google launched new TPU chips, reducing Nvidia GPU dependence. Samsung and SK Hynix, key memory suppliers, may be affected, with Samsung potentially benefiting and SK Hynix facing export risks.

South Korea's BOK Policy Board discussed the impact of semiconductor bonuses, up to 70 trillion won, on consumption, inflation, and GDP. Bonuses from companies like Samsung Electronics and SK Hynix may boost private consumption by 0.4%, but GDP impact is estimated to be low, around 0.1 percentage points. Concerns include inflation distortion and uneven distribution of benefits.

Morgan Stanley analyst Shawn Kim raised 2027 earnings forecasts for Samsung Electronics (005930.KS) and SK hynix (000660.KS) but cut target prices by 19% and 38%, respectively. Kim expects AI-driven memory demand to continue but warns of margin pressures from new production capacity and data center delays. The brokerage maintained overweight ratings, with Samsung Electronics as the top pick.

Nvidia's board launched an independent probe after CEO Jensen Huang acknowledged an affair and faced Chinese intelligence allegations. Analysts expect limited short-term impact on Samsung and SK hynix, but upcoming HBM negotiations could be affected. Nvidia's stock fell 4.27%, losing nearly $200B in market cap. SK hynix supplies 60-70% of Nvidia's HBM4 volume, while Samsung holds 25-30%.