HYBE, Major K-pop Labels Drop 40-50% in Four Months Amid AI Sector Rotation; Brokers See Historic Undervaluation

According to the Korea Exchange, major South Korean entertainment firms including HYBE, YG Entertainment, SM Entertainment, and JYP Entertainment have seen significant stock declines over the past four months. HYBE fell 50.43%, YG dropped 43.72%, SM declined 38.07%, and JYP fell 26.36%, with brokers attributing the selloff to investor rotation toward AI-related stocks.

Despite the sharp declines, major brokers including Hana Securities assess current valuations as historically low relative to earnings. HYBE trades at an estimated 2027 forward PE of 22x, while SM, JYP, and YG trade at 12-15x 2026 forward PE—well below historical averages. Brokers expect significant earnings recovery in the second half, with HYBE's Q2 operating profit forecast between 144.5 billion and 161.2 billion Korean won, marking record highs. Multiple concert tours, including BTS's world tour and upcoming activities by Stray Kids and BIGBANG, are expected to drive revenue growth in coming quarters.