OpenAI's investment in AMD ignites the industry chain, with Samsung and SK Hynix stock prices soaring to all-time highs

According to Zhitong Finance APP, after nearly a week-long holiday, the stock prices of South Korean chip manufacturers SK Hynix and Samsung Electronics both hit record highs on Friday, boosted by a series of artificial intelligence transactions (cooperations). FactSet data shows that SK Hynix's stock price surged by 10%, while Samsung Electronics rose nearly 6%, both setting new records. These two companies are expected to benefit from a deal between OpenAI and AMD (AMD.US), which could allow Sam Altman's company to acquire a 10% stake in AMD. This means that in the future, OpenAI's orders for AI training/inference chips will flow significantly to AMD, whose main suppliers of HBM (high bandwidth memory) are SK Hynix and Samsung Electronics.

Following the announcement, AMD's stock price soared, with an increase of over 40% so far this week. Meanwhile, NVIDIA's stock price also rose by 2.6% this week, after CEO Jensen Huang stated that demand has increased in recent months. Jensen Huang also confirmed NVIDIA's involvement in funding Elon Musk's AI startup xAI, expressing that he is "super excited about the financing opportunities they are pursuing."

It is worth mentioning that as the Seoul stock market resumed trading after a week-long holiday, Samsung Electronics' stock price has accumulated a 76% increase this year, with a market capitalization exceeding $390 billion.

The market is generally optimistic about Samsung's efforts to catch up in the high bandwidth memory (HBM) sector required for artificial intelligence applications. Previously, the smaller competitor SK Hynix had a head start in this field, but increasing amounts of capital are betting that Samsung can narrow the gap with SK Hynix.

According to Shawn Oh, a stock trader at NH Investment & Securities Co., negotiations between Samsung and NVIDIA (NVDA.US) regarding the supply volume, pricing, and timeline of high bandwidth memory have entered the final stages, with valuation discount issues gradually being resolved. Meanwhile, a significant supply agreement reached between Samsung and OpenAI brings additional benefits to the two Korean companies.

In the traditional memory chip market, Samsung's dominant DRAM and NAND businesses are also experiencing a strong cycle. Driven by supply shortages, the outlook for product prices continues to improve, and the market expects a "super cycle" to emerge.

Morgan Stanley analysts raised Samsung's target price by 14% to 111,000 won during the market closure, noting that memory chip prices are expected to rise significantly in the fourth quarter, and a strong demand cycle is anticipated to continue until 2026, laying the foundation for a "substantial increase" in subsequent stock prices.

It is noteworthy that this breakthrough in Samsung's stock price is different from the peak driven by retail frenzy during the pandemic in 2021; this round of increase is mainly led by foreign investors, marking its best monthly performance since 2020 in September after missing out on the global AI wave earlier this year The significant rise of Samsung Electronics and SK Hynix (the latter has increased by 145% this year) has helped South Korea become one of the best-performing stock markets this year, with the benchmark Korea Composite Stock Price Index (Kospi) having accumulated a 50% increase this year