AI Momentum: The Next Investment Destination Is Power Infrastructure

Recently, Samsung Electronics' stock price surged as much as 3% during intraday trading, drawing attention. The total dividend amount is expected to reach about 30 trillion won.

The expected dividend per share is roughly 4,500 to 4,600 won, and investment demand seeking to capture this dividend income is flowing into the market. It is analyzed as showing a differentiated trend from SK Hynix, which has a treasury share cancellation issue.

Cha Young-ju, Director of Wise Economy Research Institute, raised doubts about whether the attractiveness of preferred shares will be maintained after the ex-dividend date.

After the ex-dividend date, volatility in preferred shares compared to common shares may increase, requiring investor caution.

Samsung Electronics' buyback is scheduled to end on October 1, and SK Hynix's on October 11. As buying pressure worth about 55 trillion won combined disappears, concerns over a buying cliff are growing.

However, it was mentioned that Samsung Electronics may announce additional shareholder return policies at the time of its Q3 earnings release. This is drawing attention in conjunction with the need for follow-up measures such as dividends and treasury share cancellation based on corporate profit growth.

Therefore, rather than simple concerns over a buying cliff, expectations for additional shareholder return policies are analyzed as a factor supporting the market's downside.

Policies that return more than 50% of free cash flow (FCF) may expand depending on the scale of Q3 and Q4 profits, which is also expected to support the stock price floor.

Considering past cases where foreign selling stopped and stock prices rose after buybacks ended, concerns over a buying cliff are premature.

There are past cases where foreign selling stopped and stock prices actually rose after buybacks ended. Additional shareholder return policies act as a force that enhances defensive strength during market downturns.

Looking at data from the past 10 years, the stock market rose 8 times after the Chuseok holiday. This means positive short-term momentum can be expected.

However, what matters is the 20-day mark after Chuseok. From that point, direction tends to be determined by the market's existing trend.

Until October, prices may move in conjunction with shareholder return policies, so it is time to closely watch whether there will be a trend reversal after the short-term rise.

AI technology is evolving from Astra to Agent Muse, and then to superintelligence (ASI). Agent Muse signifies a transition beyond single-answer AI to agentic AI, which leads to increased serial processing demand and expanded semiconductor demand for high-speed storage such as CPUs, SSDs, and NAND flash.

A strategy is needed to read structural changes in related industries in line with AI development stages and capture investment opportunities.

Semiconductor substrates are emerging as an essential element for smoothly operating AI semiconductors. Related stocks are continuing positive momentum.

In particular, substrate-related stocks such as Samsung Electro-Mechanics, Simmtech, and Amotech are receiving sustained attention in this trend.

Attention should be paid to stocks like Taihan Cable that are setting prices at bottom levels. Predicting future rising themes in advance is impossible for humans due to data gaps and is not very meaningful.

One should positively assess the flow of stocks currently leading the market and take investment action.

Led by wire stocks such as Hyosung Heavy Industries and Sanil Electric, demand for Doosan Fuel Cell's fuel cells and GNC Energy's emergency generators is expected to lead next year's market. It was predicted that these sectors are highly likely to stand out significantly in the stock market next year.

With power infrastructure expansion, Hyosung Heavy Industries, Sanil Electric, Gaon Cable, and Taihan Cable can benefit, and Doosan Fuel Cell, Hanwha Ocean, and GNC Energy are also expected to show strength.

It is analyzed that while GPU shortages were initially the problem, the focus has now shifted to power supply issues.

Due to excessive CAPEX investment, cases of data center construction being halted may occur frequently next year, and direct power-related orders from hyperscalers are increasing. The value of power infrastructure is expected to rise further.

Due to these changes, valuations of secondary battery companies are varying. However, a cautious attitude is still required to judge the success of future technologies such as all-solid-state batteries.

It is analyzed that next year, attention is needed on telecom stocks such as SK Telecom and optical transceiver-related stocks. In particular, the arrival of 6G technology is expected to become core infrastructure for autonomous driving and robot control.

If 6G is commercialized and communication speeds become 4 times faster, the location of data centers may also diversify. This means investment in data center infrastructure and efficiency technologies will become more active.

Hyperscaler companies place top priority not only on technological capability but also on the ability to complete facilities within a set period to operate data centers. As the data center power shortage problem deepens, demand for power infrastructure is surging.

Hyperscalers consider on-time delivery capability, a strength of K-manufacturing, as a major criterion for selecting power infrastructure companies. Accordingly, Hyosung Heavy Industries, LS, and Hanwha Ocean are accelerating facility investment.

As in the secondary battery case in the second half of 2023, corporate investment concentration appears when expectations for the industry are alive. Corporate facility investment is a phenomenon commonly seen during industry booms rather than simply concerns over overproduction.

It takes a long time for each company to decide on facility investment, including funding conditions, site selection, and legal review. The time when such investment occurs unanimously is generally when the industry is at its best.

As in the secondary battery case in the second half of 2023, investment tends to concentrate when expectations for the industry are alive.

This could be an important trigger for an overall stock market upgrade.

In addition to Samsung Electronics and SK Hynix, shareholder return policies of materials, parts, and equipment companies and other companies that earned massive profits are expected to emerge as a major market concern in the second half. Their moves from October to December this year are drawing attention.

If narratives continue without converting into earnings, investor fatigue may increase, which may reduce investment attractiveness in contrast to companies actively pursuing shareholder return policies.

The method of pushing up stock prices with expectations alone does not provide substantive results to investors.

In a market where volatility has increased since the Chuseok holiday, one should recheck their analytical capabilities and consider switching trades for stocks with low earnings visibility. In particular, cultivating analytical ability to identify earnings changes is important.

If a stock's earnings visibility is too far off, a more cautious and strategic approach is needed in the second half, such as considering switching trades. It is recommended to reflect on investment strategy and one's own skills on the occasion of the Chuseok holiday.