Korean stock earnings season starts next week; JPMorgan says storage stocks are entering a “season of expectation reset,” corrections present buying opportunities

The JPMorgan Asia-Pacific Equity Research Team believes that Korea’s Q3 earnings season will officially kick off during the week of October 19. The recent sharp pullback in memory chip stocks is creating a mid-term buying opportunity, with the technology and financial sectors expected to become the main battlegrounds this earnings season.

According to the latest research report released on October 15 by JPMorgan analysts including Jay Kwon, last week Samsung Electronics’ preliminary results were in line with expectations, LG Electronics missed expectations, and LG Energy Solution exceeded expectations. These three early indicators have set the tone for this earnings season.

The report states that after meeting with more than a hundred investors in Asia, Jay Kwon pointed out that memory stocks have fallen by about 6% in the past month and about 15% over the past three months. During the same period, the Philadelphia Semiconductor Index (SOX) rose about 10% and fell about 4% respectively. This divergence is creating a favorable risk-reward entry point for duration trades.

Affected by overnight higher-than-expected U.S. inflation and concerns about an artificial intelligence valuation bubble, the Korean stock market plunged again. Chip giants Samsung Electronics and SK Hynix suffered especially sharp declines. As of press time, both Samsung Electronics and SK Hynix had fallen nearly 10%.

Why memory stocks are at the core of the list: the logic of expectations reset and duration trades

Over the past two weeks, Jay Kwon visited more than a hundred Asian investors in Singapore, Kuala Lumpur, and Hong Kong. The research revealed a key divergence: There’s a clear disconnect between the top-down view on the sustainability of AI spending and the bottom-up focus on memory supply and demand fundamentals, resulting in significantly polarized investor sentiment.

JPMorgan had previously characterized Q3 as a “season of expectations reset,” noting that memory stocks could remain volatile in the short term due to a lack of immediate catalysts. On the data front, memory stocks fell about 6% over the past month and about 15% over the past three months, while the Philadelphia Semiconductor Index rose about 10% and fell about 4% respectively during the same period. The sharp divergence in their performance stands in stark contrast.

However, JPMorgan believes that it is precisely this divergence in sentiment and performance that provides a good entry point for “duration trades”—in other words, mid-term bets that the upcycle in memory chips will be “longer and stronger.” Jay Kwon noted that from a mid-term perspective, the risk-reward balance has turned favorable, and recommends that investors accumulate on dips during the current pullback.

Based on this assessment, JPMorgan offers its core overweight picks for the next six months: Samsung Electronics and SK Hynix (memory play), Kioxia (memory), Samsung Electro-Mechanics (MLCC and substrates), ISU (AI PCB), and ISC (test sockets).

This portfolio covers not only memory chips themselves but also their upstream and downstream components, reflecting JPMorgan’s systematic approach to a mid-term recovery across the entire memory industry chain, rather than just betting on a single link.

Validation criteria and invalidation boundaries for this outlook

JPMorgan has also provided a framework to validate this outlook.

• Performance results: Observe whether the profitability of the technology and life insurance sectors in the earnings reports released from the week of October 19 onward exceeds that of the sectors labeled as negative.
• Mechanics: Key tracking indicators will be whether spot memory prices, AI-related orders, and capital expenditure show marginal changes that support the “longer upcycle” thesis for duration trades.

The bank also makes clear the invalidating conditions: if supply and demand for memory continues to weaken, catalysts remain absent, or earnings season sees widespread downward revisions, JPMorgan would need to withdraw the above outlook. The validation window is set for the earnings release period between October 19 and early November 2026.