The Big Tech Corporate Bond Paradox Hitting Samsung Electronics and SK Hynix | Myung Min-jun, Park Ga-young, Song Jae-kyung

Summary

Song Jae-kyung explains how AI-driven Big Tech borrowing is pushing up long-term bond yields and creating a paradox where Big Tech corporate bonds attract money relative to US Treasuries. He discusses US fiscal debt, midterm-year seasonality, and the strong S&P 500 earnings revision backdrop. He concludes that high-rate conditions favor dividend and value stocks, and sees Samsung Electronics and SK Hynix as beaten-down semiconductor names that may attract longer-term buyers.

• US midterm election years normally see weak equity returns, but current S&P 500 performance has been unusually strong.
• Long-term Treasury yields have risen sharply across major countries on inflation, supply-chain fragmentation, and government debt.
• AI investment is boosting big tech earnings revisions but also fueling corporate bond issuance that pressures Treasury yields.
• Big Tech corporate bonds are attracting money over US government bonds because they offer higher yields.
• Song sees high-rate conditions favoring dividend, value, and low-PBR stocks.
• Samsung Electronics is viewed as becoming a value and high-dividend stock, while SK Hynix ADR shows positive after-market action.
• Meta, Microsoft, Amazon, and Alphabet carry large off-balance-sheet liabilities that could become a future risk if AI earnings disappoint.