Lazard Emerging Markets Equity Fund buys the dip in Samsung, optimistic about the upward cycle of memory chips

Source: Global Market Broadcast

The manager of a Lazard Asset Management fund with assets of $9.6 billion took advantage of Samsung Electronics’ sharp decline in July to add the stock to the portfolio for the first time in over a year.

Monika Shrestha, co-manager of Lazard’s emerging markets equity portfolio, is betting that the upward cycle of memory chips driving Samsung’s huge profits will continue into 2028. Data compiled by Bloomberg shows her fund outperformed 93% of peers over the past month and 98% over the past five years.

In an interview, Shrestha said the recent drop in Samsung’s share price is “an attractive buying opportunity.” While excessive trading and high volatility have scared off AI-themed investors, she expects the overall narrative of robust chip sales growth driven by large tech companies’ spending to remain unchanged.

“The pace of memory price increases will slow, but the overall memory market still favors higher prices,” the fund manager said. “There is no sign that capital expenditure demand from hyperscale data centers is slowing.”

Shrestha noted that Samsung is a very typical bottom-up stock-picking case, as it is attractively valued with a high return on equity (ROE). Its expected ROE has soared to a record high of over 50%, compared to the global chip peers’ average ROE of about 35% as measured by the Philadelphia Semiconductor Index.

Relative to the benchmark MSCI Emerging Markets Index, underweighting technology stocks helped Shrestha’s fund weather the July plunge. After SK Hynix surged, she reduced the position and reinvested proceeds in energy stocks such as Brazil’s Petrobras and Vista Energy, as well as Chinese consumer and financial stocks.

SK Hynix remains the fund’s second-largest position after TSMC. Over 60% of Lazard’s fund exposure is concentrated in emerging Asian markets, with higher allocations in mainland China, Taiwan, and South Korea.

Shrestha noted that rising competition from Chinese memory makers such as ChangXin Memory Technologies has shaken up the AI trade in recent weeks, which could pose long-term risks to pricing power. Nevertheless, she remains positive on the memory theme and considers Samsung shares to be of good value.

Samsung’s share price is down 36% from its historical peak, but it remains nearly 230% higher than a year ago as investors have been snapping up memory stocks.