South Korea stocks surge 112% on AI memory boom
South Korea's stock market has surged 112% in 2026, led by SK Hynix and Samsung Electronics, which dominate the high-bandwidth memory supply chain for AI. Despite the rally, valuations remain low with significant revenue growth projected for the coming years.
*this image is generated using AI for illustrative purposes only.
South Korean equities have emerged as the top global performers in 2026, driven by a massive rally in high-bandwidth memory (HBM) stocks essential for artificial intelligence infrastructure. The iShares MSCI South Korea ETF (EWY) has gained 112% year-to-date through June 16, delivering 11 times the return of the S&P 500. This surge positions South Korea as the primary beneficiary of the AI buildout, outperforming all other single-country ETFs tracked by CountryETFTracker.
The AI Memory Super-Cycle
The rally is concentrated in two Seoul-listed giants, SK Hynix Inc. and Samsung Electronics Co., which manufacture the overwhelming majority of the world's HBM. These specialized stacked DRAM chips are critical components for Nvidia Corp.'s AI accelerators. As demand for AI infrastructure exploded in 2026, order books and pricing power for these Korean manufacturers expanded significantly.
SK Hynix, the largest position in EWY at 23.17% of assets, has surged 266.64% year-to-date. Samsung Electronics, holding a 23.11% weight in the fund, has risen 186.65%. Together, these two stocks account for roughly 46% of the ETF's total assets and drive more than half of its annual performance.
Valuation and Growth Outlook
Despite the substantial gains, valuations for these memory leaders remain historically low. SK Hynix trades at 6.5 times forward earnings, while Samsung Electronics trades at 5.9 times. Both stocks carry PEG ratios below 0.10, suggesting the market is undervaluing their growth potential relative to expected earnings increases.
Consensus estimates indicate robust revenue growth ahead. Analysts project SK Hynix's forward revenue will rise 237.28% year-over-year, with a two-year revenue CAGR of 123.16%. Samsung Electronics is expected to see forward revenue growth of 97.38% year-over-year and a two-year CAGR of 60.26%.
Comparative Market Performance
The concentration of HBM giants in the South Korean index has allowed it to significantly outperform broader US markets. While memory stocks like Micron Technology Inc., Western Digital Corp., and SanDisk Corp. have posted triple-digit gains in the S&P 500, their lower index weight limits the broader market's impact. In contrast, the heavy weighting of SK Hynix and Samsung in Korean ETFs amplifies the sector's influence.
Over the past 12 months, EWY has gained 208.75%. This performance nearly doubles that of the iShares MSCI Taiwan ETF (EWT), which rose 63.37%, and vastly exceeds the 10.03% return of the SPDR S&P 500 ETF Trust (SPY).
| Metric | Value |
|---|---|
| EWY YTD Gain | 112% |
| S&P 500 YTD Gain | 10.03% |
| SK Hynix YTD Gain | 266.64% |
| Samsung YTD Gain | 186.65% |
| SK Hynix Forward P/E | 6.5x |
| Samsung Forward P/E | 5.9x |
How sustainable is the HBM demand surge given potential fluctuations in global AI infrastructure spending?
What risks does the heavy concentration in SK Hynix and Samsung pose to the EWY ETF if these stocks face a correction?
Could geopolitical tensions between South Korea and its neighbors disrupt the supply chain for these critical memory chips?
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