Buy Samsung stock on a pullback, Morgan Stanley

Investing.com -- Samsung Electronics shares look attractive after the recent sell-off, according to Morgan Stanley analyst Shawn Kim, who said the correction has created a buying opportunity ahead of a major shift in AI memory architecture.

Morgan Stanley noted the stock has dropped about 20 percent week to date, compared with a 17 percent decline in the KOSPI.

Kim wrote that the memory market for AI inference is moving toward a hybrid model as chips become more specialised.

While HBM continues to dominate, “SRAM is carving a niche for workloads where latency matters more than throughput density,” Morgan Stanley stated.

The firm expects that Nvidia will introduce a new inference chip at its upcoming GPU Technology Conference, using a Language Processing Unit architecture built around large amounts of on-chip SRAM.

Morgan Stanley said the architecture is “purpose-built for the sequential speed of inference” and appeals to customers who are “willing to pay for speed.”

According to Kim, the debate is not SRAM versus HBM but how both will “remain hierarchical, combining SRAM for hot-path execution with HBM for scalable memory capacity.”

Importantly, LPU designs could bypass “current supply chain bottlenecks in HBM and CoWoS packaging,” Morgan Stanley added.

Despite uncertainty over how the AI memory market eventually fragments, the firm maintained Samsung Electronics as its top pick, citing HBM4 qualification, SRAM capabilities, foundry flexibility and the broader commodity upcycle. Morgan Stanley also reiterated its positive view on SK hynix.

“Historically, such corrections have offered a good opportunity to buy,” Kim wrote, adding that earnings expectations still have “a lot of room for recovery.”

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