Demand More Important Than Interest Rates

Employment data is presented as the first data point, and it is expected to be used to determine whether to accelerate interest rate hikes.

Current employment data indicates that the economy is sustainable and not overheated. This leads to the analysis that employment data alone is not sufficient to prompt interest rate hikes. The Consumer Price Index (CPI) data to be released this week is expected to play a crucial role.

Of the recently announced 160,000 job increase, approximately 60% is attributed to one-time factors or recovery after holidays. Employment growth in manufacturing and construction is linked to AI infrastructure expansion, while workforce reductions in the service sector suggest efficiency gains through AI adoption. This demonstrates the positive impact of AI on the job market.

It focuses on increasing the success rate of end-to-end (E2E) tasks, where a single command leads to the final output. The key is to create a high success rate model, such as completing a task eight times after starting it once.

Even if the price is high, a high task success rate of over 90% can be more advantageous in terms of overall cost efficiency. For example, running a model with a 20% failure probability might only yield a 17% actual success rate. Therefore, calculating the cumulative success probability of end-to-end (E2E) tasks is crucial.

A model with a 43% probability compared to 17% shows more than double the performance, which, even with a higher unit cost, leads to overall cost savings in terms of efficiency. High-completeness AI models are essential for implementing agent AI, highlighting the importance of high-performance models.

Major AI companies like OpenAI, Anthropic, and Google are intensifying competition to increase the success rate of end-to-end (E2E) workflows. This shift makes them focus more on generating actual demand rather than concerns about a slowdown in simple investment.

In particular, memory and storage-related stocks have risen, contrary to interest rate concerns. This suggests a fundamental-driven trend change that differentiates it from other sectors.

This is analyzed as a trend linked to earnings improvement, not a temporary surge. The fact that even big tech companies were not significantly impacted despite employment data increasing interest rate hike probabilities supports this trend.

US memory-related stocks consistently reflected fundamental improvements and rose during July and August. In contrast, domestic stocks like Samsung Electronics recorded negative performance compared to late July and were sluggish. This is attributed to the dispersion of domestic market funds into other sectors such as electric vehicles, secondary batteries, and finance. Consequently, domestic stocks did not fully reflect their fundamentals.

In this regard, there is a valuation difference between Hynix ADR and Micron, with Hynix ADR showing a premium phenomenon compared to the Hynix main share.

Hynix ADR is listed in the US, and efforts are being made to treat it on par with Micron. This has resulted in an excessive premium difference of approximately 44% between the domestic main share and the ADR.

Furthermore, it provided specific figures for 2028, two years out, at $230 billion. Such proactive disclosure of information appears to contribute to maintaining the company's valuation.

85% of purchased shares were retired, helping to reduce total capital and maintain ROE and valuation. Korean companies are also increasing shareholder returns, but market expectations are already high.

If the semiconductor supply shortage deepens in the future, high-bandwidth memory (HBM) price increases are expected to be permissible.

The price of HBM4E may be decided as early as October, rather than year-end or early next year. This suggests that the market recognizes that there are no issues with memory fundamentals.

This discount level is similar to what was seen during the worst market conditions in the past.

The US economy is currently healthy but not overheated. While inflation data needs further confirmation with CPI, the general analysis is that the economy is not overheated. Therefore, future investments should focus on memory demand rather than interest rate issues.