Morgan Stanley and Nomura have huge differences of opinion on how long the AI-driven memory chip boom cycle in South Korea will last. Morgan Stanley raised the target price of SK Hynix by 38% to 1.6 million won on Monday; at the same time, it also lowered the target price of Samsung Electronics by 19% to 309,000 won. The reason for the reduction is the increased supply of chips, compounded by the risk of delays in data center construction in 2028. Nomura maintained the original target prices in the report released last Thursday: 4.7 million won for SK Hynix and 670,000 won for Samsung Electronics, which are 2.9 times and 2.2 times the adjusted target price of Morgan Stanley, respectively. Both investment banks are optimistic about next year's profit performance. Morgan Stanley raised Samsung's and SK Hynix's 2027 operating profit forecasts by 9% and 13%, respectively, but the long-term profit margin assumptions were drastically lowered. Morgan Stanley analyst Shawn Kim said in a Monday report: “The core debate in the memory chip market is whether we can avoid a 'profit cliff' in 2028.” For SK Hynix, Kim lowered its expected average operating margin from 53% to 28% for 2029-2035, judging that the profit level will return to the historical normal range.

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