Samsung Electro-Mechanics: From 700% surge to stunning collapse

'Better than Samsung Electronics and SK Hynix,' they said

Samsung Electro-Mechanics, which Morgan Stanley had strongly recommended, surged briefly before falling again — leaving investors who followed the bank's call nursing losses. Morgan Stanley recently shifted its top pick from Samsung Electronics to Samsung Electro-Mechanics.

The strong buy recommendation sent Samsung Electro-Mechanics shares soaring on Tuesday, Aug. 12, breaking through 1.5 million won ($1,080), but the stock has since tumbled back into the 1.3 million won range.

On Friday, the shares closed at 1.316 million won, down 5.73 percent from the previous session.

Morgan Stanley had said of Samsung Electro-Mechanics that "even under the most conservative bear-case scenario, there is upside potential," adding that "under the base-case scenario, the share price could roughly double." The bank set a bull-case target price of 3 million won.

Samsung Electro-Mechanics posted an unrivaled gain this year amid an unprecedented bull run. The stock surged roughly 700 percent — climbing from the 200,000 won range to above 2.4 million won — the highest return of any stock on the Kospi. The explosive rally drew a flood of retail investors, earning the stock the nickname "the people's emperor stock."

Now the shares that once topped 2.4 million won are struggling to hold the 1.3 million won level — a steeper decline than either Samsung Electronics or SK Hynix. Investors have vented their frustration online, with comments such as "those who didn't buy are the real winners" and "we're ruined."

Samsung Electro-Mechanics MLCC products [Yonhap]

The engine behind Samsung Electro-Mechanics' record-breaking rally was an explosion in demand for high-value multilayer ceramic capacitors, or MLCCs, driven by the rapid expansion of AI servers. Morgan Stanley cited the strong likelihood of rising MLCC prices as the key reason for switching its top pick to Samsung Electro-Mechanics.

Underlying that view is the surge in AI data center investment. As hyperscalers have consistently maintained strong component demand, other customers unrelated to AI have grown anxious about securing supply.

Samsung Electro-Mechanics holds roughly a 25 percent share of the global MLCC market for AI servers.

The brokerage community still views Samsung Electro-Mechanics favorably, with target prices reaching as high as 3 million won.

Concerns about short-term overheating weigh heavily on the stock. It has recorded the steepest share price decline among the top 10 large-cap stocks by market cap. The wild swings have produced not only investors who locked in large gains, but a growing number who have suffered significant losses.

park@heraldcorp.com