A SURPRISE endorsement from Nvidia may have excited some investors over the prospects for Samsung Electronics to catch up in the artificial intelligence (AI) race, but others remain unconvinced.
Key Samsung rival SK Hynix is already supplying Nvidia with the latest version of high-bandwidth memory, HBM3E. While Jensen Huang seems to have indicated that Nvidia will buy some HBM chips from Samsung as well, SK Hynix has gotten a big jumpstart by supplying previous generations of the technology.
“It is true that Samsung Electronics has become more attractive than in the past,” said Yoon Joonwon, a fund manager at DS Asset Management. “But it is too early to buy it on expectations for its HBM business.”
The AI theme has been more of a boon for SK Hynix so far, with its shares doubling over the past year, outpacing Samsung’s 30 per cent gain. The difference lies in SK Hynix’s lead in HBM chips, which work alongside processors crucial for the training of large language models. Samsung is more exposed to the cyclical demand and pricing of commoditized traditional memory, given its market share in consumer devices.
That is why it was a surprise when Huang reportedly said he plans to buy Samsung memory too. His comments have put shares of South Korea’s most valuable company on track for a 10 per cent weekly gain, their biggest since 2015.
Options traders have been more ambivalent. Bets on both directions soared this week for Samsung, including puts wagering on a 70 per cent drop in the next three months and calls that will cash in if the stock surges 300 per cent in the same time span.
Day traders took a contrarian stance on the Huang boost. While institutional investors poured cash into Samsung shares on Wednesday and Thursday, retail traders sold three trillion won (S$3 billion) worth of the stock on a net basis, a record two-day withdrawal.
“Majority opinion is still that Samsung will not be getting the call on HBM3E from Nvidia,” said Cha So-yoon, a fund manager and equity team head at BNK Asset Management. “If there is a turnaround in tech sentiment, it will be great for both companies but SK Hynix doesn’t appear to be losing its HBM hegemony.” BLOOMBERG
