Q2 operating profit of 76 cents on the dollar will not last. The stock needs that peak to persist; I expect 2027 earnings closer to $8 a share and a 20 times multiple.
Key points
- 76% operating margin in the June 2026 quarter is a cycle peak, not a run-rate.
- $178 needs about KRW 112 trillion of operating profit next year at 20 times after-tax earnings.
- KRW 88 trillion of 2027 operating profit is my base, after prices and mix normalize.
The call
The price requires the June quarter’s KRW 60.5 trillion operating profit to stay near that level through 2027. At 1,340 won per dollar and 7.30 billion ADS-equivalent shares, that is a $180 billion annual run-rate the market is capitalizing as if it were durable.
I believe volume stays high but selling prices and mix fade. HBM4 ramps help, yet conventional DRAM and NAND already show the cycle. I use KRW 220 trillion of 2027 revenue and a 40% operating margin, then 20 times after-tax earnings.
Revenue and operating profit (KRW trillions)- Revenue
- Operating profit
- Author OPM
Company releases through Q2 2026; forecasts are the author's.
Valuation
| Item | Figure |
|---|
| 2027E revenue | KRW 220 trillion |
| 2027E operating margin | 40% |
| 2027E net income (22% tax) | KRW 68.6 trillion |
| ADS-equivalent shares after buybacks | 7.15 billion |
| 2027E EPS per ADS | $7.16 |
| Target multiple / price | 22 times / $156 |
Twenty-two times is a mid-cycle memory multiple, not a trough. Downside is larger if prices break; upside is if 2027 margins stay above 55%. That skew is why this is a sell, not a hold.
Bridge from today's price to the 12-month targetAuthor estimates; FX 1,340 won per dollar.
Risks
- AI server demand stays so tight that HBM and server DRAM prices do not roll over in 2027.
- The KRW 40 trillion buyback executes faster and at lower prices than I model.
- The won weakens sharply, lifting dollar EPS without a business change.
What would change my mind
A Q3 2026 print that holds operating margin above 70% with rising shipments would force me to lift 2027 earnings.