Nvidia Earnings Prove AI Investment Cycle…Samsung Electronics, SK Hynix Also Rebound

Lee Kwon-hee, CEO of Wizwave, predicted that memory shortages will continue from 2027 to 2028. He explained that this outlook would form the basis for memory companies to upgrade their valuations through performance verification. He referenced TSMC's past stock price multiple increases, adding that memory companies could also see their corporate value re-evaluated if their earnings meet expectations.

CEO Lee stated, "If we navigate 2027 smoothly, and there are talks of shortages continuing until 2027 and 2028, the important thing is that after that, we can upgrade the valuation once."

CEO Lee Kwon-hee assessed that Nvidia's earnings announcement significantly resolved market doubts and volatility concerning memory companies. He stated that Nvidia's performance served to clear up market anxieties at once.

CEO Lee remarked, "Today's Nvidia earnings really feel like they've tidied up all the doubts and difficulties we've had, all at once."

CEO Lee Kwon-hee mentioned that recent rumors about reduced HBM usage and lower specifications have circulated in the market, contributing to the decline in SK Hynix's stock price. He emphasized that a clear statement from Nvidia regarding these rumors would be a critical factor in determining future stock movements.

He said, "If Nvidia were to say, 'What are you talking about? We're going with our original specifications,' then Hynix's stock would rise even more."

CEO Lee Kwon-hee observed that the market sees what it wants to see, and considering the rise in semiconductor prices, Nvidia's performance was decent. He analyzed that despite a decrease in free cash flow (FCF), there is a lenient market reaction, indicating a shift in market interpretation standards from growth to stability.

CEO Lee explained, "The market sees what it wants to see. It sees what it wants at that time. So, when it was in a strong growth phase, it looked at these numbers, but now it's more about how, despite the high costs, Nvidia has managed to maintain things well."

CEO Lee Kwon-hee explained that Nvidia is strengthening relationships with partners like Samsung Electronics and SK Hynix, including making advance payments and signing long-term contracts. He added that Nvidia is also expanding cooperation with cloud providers and focusing on securing seed money to build an AI ecosystem.

He said, "Nvidia must have paid a lot of down payments to Samsung and Hynix as an incentive, and besides that, we now see expanded relationships with neo-cloud companies and increased investment capital."

CEO Lee Kwon-hee noted that after Nvidia's earnings release, stock prices of Nvidia's partners, such as Micron and TSMC, rose in tandem. He interpreted this as a broad alignment across the semiconductor sector, centered around Nvidia.

CEO Lee stated, "Today, in after-hours trading, from SanDisk, I mean, Micron, to all the companies we want to see, they're all rising. Even TSMC is rising. Companies related to partners are pulling up the entire sector."

CEO Lee Kwon-hee assessed that the Jackson Hole meeting's importance to the current market is low. He explained that it is largely for networking among Fed members, and unlike past periods of liquidity supply, its influence is now limited.

CEO Lee unequivocally stated, "Jackson Hole is not important at all."

CEO Lee Kwon-hee stated that the US Core PCE index met expectations. Although Headline PCE came out slightly higher, he judged that it was not enough to significantly argue for an interest rate hike.

He said, "Core PCE came out as expected, and only the headline is a bit high; it can provide an excuse, but I don't think it's a figure that strongly justifies a massive rate hike."

CEO Lee Kwon-hee analyzed that the current market liquidity environment shows little change, as the Fed is reducing liquidity while the Treasury is releasing some. He emphasized that, unlike past periods of liquidity supply, investment cycles are now more important to the market than liquidity itself.

CEO Lee explained, "Currently, it has decreased a lot, so they are neither increasing nor decreasing it. The Fed is reducing it a bit, and the Treasury seems to be releasing some. If you add and subtract, it's pretty much neutral money-wise."

CEO Lee Kwon-hee diagnosed that current US growth is stemming from Nvidia and AI investment, not from personal consumption as in the past. He stated that the AI investment cycle, including data center construction, is driving GDP growth, which necessitates a change in how the market is assessed.

He said, "Currently, US growth is coming simply because of Nvidia. It's about how many AI data centers are being built. GDP growth is all coming from that, so it has entered an investment cycle, hasn't it?"

CEO Lee Kwon-hee explained why global stock markets are recording all-time highs even as the US 10-year Treasury yield surpasses 4.7% and the 30-year yield exceeds 5.2%. He analyzed that this is due to a paradigm shift globally from a liquidity market driven by interest rates to a growth market centered on investment cycles.

He said, "Interest rates are going to 4.7%, and there's a fuss about the 30-year yield passing 5.2%, but why are stock prices at all-time highs? The entire world has entered an investment cycle and is betting on growth."

CEO Lee Kwon-hee evaluated that despite 'K-stock flight' fears emerging in early August, the market is rebounding more robustly than expected. He explained that the market is now focusing more on various industry-specific investment momentum rather than macroeconomic variables. He predicted that this trend would dominate the market going forward.

He said, "It came out in early August. But now it's late August, and what happened? It's recovering surprisingly well and robustly. Now the market is turning its attention to diverse industries and investment momentum, which are strong enough to override macro variables."

CEO Lee Kwon-hee assessed that Hyundai Motor's Investor Day was disappointing as it felt like a ceremonial event, repeating information already known to the market.

He said, "It's just like a ceremonial event. They talk about things everyone already knows."

CEO Lee Kwon-hee pointed out that Hyundai Motor's announced share buyback of approximately 800 billion won involved burning treasury shares, which amounts to less than 1% of Hyundai Motor's market capitalization. He compared this to Samsung Electronics and SK Hynix's share buybacks, which were around 3.3% of their market caps, explaining that Hyundai Motor's scale disappointed investors.

CEO Lee mentioned, "They announced they would buy back and retire treasury shares worth almost 798.1 billion won, just under 800 billion won."

CEO Lee Kwon-hee stated that investors at Hyundai Motor's Investor Day expected concrete details regarding Boston Dynamics or Atlas robots, but the presentation focused mainly on vehicle-related content, failing to meet expectations. He added that investors want a clear blueprint for the robot business.

He expressed regret, saying, "They didn't talk about robots... Everyone was waiting for something related to Boston Dynamics."

Based on his experience in China, CEO Lee Kwon-hee predicted that competition in the physical AI sector would accelerate very rapidly. He believed that China's pursuit would quicken the pace of robot technology development by the US and related companies. Regarding investing in Hyundai Motor, he recommended long-term, systematic investment.

He added that investment in Hyundai Motor should be approached with a long-term perspective.

CEO Lee Kwon-hee analyzed that former President Trump's executive order regarding foreign transformers likely targeted China. He explained that considering the contributions of Korean companies in the US, this executive order would not necessarily be a negative for domestic companies.

He said, "It was probably issued to target China."

CEO Lee Kwon-hee analyzed that while the power equipment industry's performance is good, the recent correction in power equipment stocks aligns with adjustments in the semiconductor and AI sectors. He explained that power equipment stocks are also taking a break amid a broader market correction.

CEO Lee stated, "Since semiconductors and AI are all resting, everything else will rest too. It's just that semiconductors are taking a bit of a break."