Shares of Samsung Electronics and SK Hynix fell roughly 3% on Wednesday, as a fresh macro shock—soaring oil prices and climbing Treasury yields—weighed on the AI memory trade. In early Seoul trading, Samsung was down 3.16% at 252,750 won, while SK Hynix slipped 3.6% to 1.632 million won.
The KOSPI index opened 3.08% lower after renewed US-Iran tensions pushed WTI crude above $90 a barrel and drove the 10-year US Treasury yield to near 4.8%. This combination is becoming a valuation problem for tech stocks, as higher discount rates reduce the present value of future AI profits.
Oil and yields: a new headwind for AI valuations
The selloff underscores how quickly geopolitical events can translate into valuation pressure for high-growth sectors. Higher oil prices can keep inflation elevated, limiting central banks' ability to ease policy and potentially forcing interest rates higher. The US 10-year yield reached 4.8122% in Asian trading, its highest level in nearly three years, after the Nasdaq fell 1% overnight.
For companies whose valuations rely heavily on earnings expected years into the future, rising bond yields mean investors demand higher returns for holding equities, compressing the multiples they are willing to pay. As one analyst noted, the "summer party for risk assets is over," with investors again factoring the macro backdrop into equity prices.
Strong memory demand offers limited insulation
Wednesday's decline does not appear to reflect a deterioration in semiconductor fundamentals. South Korean chip exports remained robust in August, and demand for high-bandwidth memory and advanced DRAM continues to benefit from AI infrastructure spending. Kiwoom Securities analyst Han Ji-young noted that "August chip exports also confirmed the durability of semiconductor earnings."
This distinction is crucial: Samsung and SK Hynix can post stronger earnings while their shares fall if investors reduce the valuation multiples assigned to those profits. The risk is particularly acute after the 2026 rally in Korean semiconductor stocks, when expectations were already elevated. The tension is shifting from whether AI-memory demand can hold up to whether earnings can grow quickly enough to offset a tougher rates backdrop.
Buybacks provide support, but not immunity
Both chipmakers have a key source of support: their own balance sheets. Samsung and SK Hynix are conducting large share-repurchase programs, helping absorb some selling from foreign and institutional investors. According to the Seoul Economic Daily, other corporate entities bought a net 3.3 trillion won of KOSPI shares over the previous two sessions, largely reflecting the chipmakers' buybacks.
Han estimates that, at the current pace, Samsung could continue buying shares until around October 8 and SK Hynix until roughly October 16. This steady demand could cushion further declines, but it cannot eliminate the impact of a broad global repricing. Foreign and institutional investors were net sellers again as the KOSPI opened sharply lower on Wednesday.
The situation echoes recent concerns about memory stocks sliding despite Nvidia's AI boom, and comes as Chinese memory makers ramp up output, adding to supply-side worries. Meanwhile, Dow futures slid 315 points as yields and oil pressure equities broadly.
Investors are now weighing whether AI memory demand can outpace the drag from higher rates. While buybacks offer a floor, they are not a cure-all. The coming weeks will be critical as markets digest the interplay between geopolitics, inflation, and tech valuations.
This article is for informational purposes only and does not constitute financial advice.
