Joining NVIDIA's HBM chip supply chain is expected to boost Samsung Electronics' AI narrative? The market is not buying it

According to Zhitong Finance APP, there were earlier reports that NVIDIA plans to use Samsung Electronics' high-bandwidth memory (HBM) chips in its artificial intelligence processors. Some investors are excited about Samsung Electronics catching up in the artificial intelligence competition, but this does not seem to be universally recognized.

Samsung Electronics' main competitor, SK Hynix, has already provided NVIDIA with the latest version of high-bandwidth memory HBM3E. Although Huang Renxun seems to have indicated that NVIDIA will also purchase some HBM chips from Samsung Electronics, SK Hynix has made a huge leap by providing previous generations of technology.

Yoon Joonwon, fund manager at DS Asset Management Co., said, "Indeed, Samsung Electronics is more attractive than before. But considering the expectations for its HBM business, it is still too early to buy now."

So far, the artificial intelligence theme seems to have a greater impact on SK Hynix, whose stock price has doubled in the past year, exceeding Samsung Electronics' 30% increase. The difference lies in SK Hynix's leading position in HBM chips, which are crucial for processors used to train large language models. Considering Samsung Electronics' market share in consumer devices, it is more susceptible to the cyclical demand and pricing of traditional memory products.

This is also why the market was surprised when Huang Renxun announced his plan to purchase Samsung Electronics' memory chips. His remarks are expected to lead to a 10% weekly increase in the stock price of this most valuable South Korean company, the largest increase since 2015.

The attitude of options traders is more contradictory. This week, there has been a significant increase in bullish and bearish bets on Samsung Electronics' stock price, including bets that the stock will fall by 70% in the next three months, as well as bets that it will surge by 300% during the same period Short-term traders have taken the opposite stance on this uptrend. While institutional investors bought Samsung Electronics shares in large quantities on Wednesday and Thursday, retail investors net sold stocks worth 30 trillion Korean won (23 billion US dollars), setting a record for two days of net outflows.

Cha So-yoon, fund manager and head of the stock team at BNK Asset Management Co., said, "Most people still believe that Samsung Electronics will not receive NVIDIA's favor for its HBM3E. If there is a turnaround in the popularity of tech stocks, it would be good for both companies, but SK Hynix seems to have not lost its dominant position in HBM."