The AI Supercycle and the Rise of South Korean Memory Giants: Why Samsung and SK Hynix Are Set to Outperform in 2026

The global economy is entering a new era defined by artificial intelligence (AI), a force that is reshaping industries and redefining technological frontiers. Central to this transformation is the insatiable demand for memory chips, particularly DRAM and NAND flash, which underpin the computational and storage needs of AI systems. South Korea's memory giants, Samsung and SK Hynix, are uniquely positioned to capitalize on this structural shift. Their dominance in high-bandwidth memory (HBM) and aggressive investments in next-generation technologies, combined with compelling valuation metrics, suggest they are poised to outperform in 2026.

Structural Tailwinds: AI-Driven Demand and Supply Constraints

The DRAM market is set for a dramatic expansion in 2026, driven by AI's exponential growth. According to a Gartner report, DRAM revenue is projected to grow by 30% in 2026, fueled by rising average selling prices (ASPs) and constrained supply. This scarcity stems from the reallocation of production capacity toward HBM, a specialized DRAM variant critical for AI workloads. TrendForce notes that capital expenditure in the DRAM sector will reach $61.3 billion in 2026, with Samsung and SK Hynix leading the charge in advancing HBM4 and refining manufacturing processes. However, cleanroom capacity limitations will likely restrict supply-side growth, creating a favorable environment for price increases and margin expansion.

The NAND flash market is similarly poised for sustained growth. AI's reliance on large-scale data storage and processing is driving demand, with the global NAND market forecasted to reach $65 billion in 2026 and $70 billion in 2027. According to AXTEKIC, this growth is being driven by rising demand and supply constraints. TrendForce highlights that supply will remain tight throughout 2026 due to cautious capital expenditure strategies and structural demand from AI storage applications and hard disk drive (HDD) shortages. This confluence of factors-robust demand and constrained supply-positions Samsung and SK Hynix to benefit disproportionately from the AI supercycle.

Valuation Asymmetry: Undervalued Giants in a High-Growth Sector

Despite their dominant market positions, Samsung and SK Hynix trade at significant discounts relative to their peers. SK Hynix, for instance, is currently valued at a 2026 Price-to-Earnings (P/E) multiple of 7x, far below the 12x multiple of Micron, a key competitor in the HBM space. According to Gurufocus, its Price/Book (P/B) ratio of 3.76 also suggests undervaluation compared to industry benchmarks. According to ASTUTE Group, SK Hynix holds 62% of the HBM market, with Micron and Samsung trailing at 21% and 17%, respectively. Meanwhile, Samsung Electronics, though more diversified, has seen its stock price nearly double in 2025, yet analysts argue it still has room to run. According to Gurufocus, institutional forecasts suggest the company must rise by an additional 69.46% to meet KOSPI 5,000 target levels.

This valuation asymmetry reflects a market that underappreciates the structural tailwinds facing the memory sector. Both firms are investing heavily in next-generation technologies, such as HBM4 and advanced DRAM processes, which are expected to drive long-term profitability. According to ASTUTE Group, Samsung's resumption of construction at its Pyeongtaek P5 fab underscores its commitment to scaling HBM4 production. Similarly, SK Hynix's development of HBM4 with a 40% improvement in power efficiency positions it to capture incremental demand from AI infrastructure providers.

Competitive Positioning: Leading the HBM Revolution

The HBM market, a critical battleground for AI-driven growth, is where Samsung and SK Hynix's strengths are most evident. According to ASTUTE Group, SK Hynix currently holds a 62% share of the HBM market, with Micron and Samsung trailing at 21% and 17%, respectively. However, Samsung is rapidly closing the gap. Its HBM3E parts are already being qualified by major customers, and HBM4 is expected to enter full-scale production by 2026. The company's 10-nanometer class 6th generation DRAM process further enhances its competitive edge, enabling higher performance and energy efficiency.

Micron, while a formidable player, faces challenges in scaling HBM4 production. Though it has begun shipping HBM4 samples rated at 11 Gbps, according to ASTUTE Group, its reliance on foundry partners for future HBM4E products introduces execution risks. In contrast, Samsung and SK Hynix's vertically integrated models allow for tighter control over R&D and manufacturing, accelerating time-to-market for cutting-edge products. Counterpoint Research anticipates that Korean firms will maintain their dominance in the HBM market, as Chinese competitors struggle with technical hurdles in thermal management and operating speed.

Conclusion: A Compelling Investment Case

The AI supercycle is not a passing trend but a structural transformation that will redefine global technology markets. Samsung and SK Hynix are at the epicenter of this shift, leveraging their technological prowess and capital discipline to capture outsized gains. With DRAM and NAND markets forecasted to grow at double-digit rates, and HBM demand accelerating, these firms are well-positioned to benefit from both top-line expansion and margin improvement.

Moreover, their valuation metrics present an asymmetric opportunity. SK Hynix's low P/E and P/B ratios suggest the market is underestimating its long-term potential, while Samsung's stock remains attractively priced relative to its growth trajectory. As AI adoption accelerates and cleanroom capacity constraints persist, the structural tailwinds facing these companies will only intensify. For investors seeking exposure to the next phase of the AI revolution, Samsung and SK Hynix offer a rare combination of industry leadership, technological innovation, and compelling valuations.