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Shares of South Korean chipmaker SK Hynix (SKHY) jumped after the company reported record third-quarter earnings that beat Wall Street expectations.<\/p>\n
The stock closed 10.89% higher in South Korea, while its U.S.-listed ADRs rose more than 12% on Wednesday, Oct. 28.<\/p>\n
SK Hynix reported quarterly revenue of 104.62 trillion won ($78.86 billion), beating analysts’ estimates of 98.34 trillion won, according to LSEG data pulled by CNBC.<\/p>\n
Operating profit reached 83.33 trillion won, above expectations of 76.72 trillion won.<\/p>\n
Revenue surged 327.9% from a year earlier, while operating profit jumped 632.1%. Both figures reached record highs, with quarterly sales exceeding 100 trillion won for the first time.<\/p>\n
The results were driven by rising memory chip prices and strong demand for high-bandwidth memory (HBM), a key component used in artificial intelligence processors.<\/p>\n
Year-to-date, SK Hynix’s South Korea-traded stock is up 128%. Its American Depositary Receipts (ADRs) began trading on the Nasdaq Global Select Market on July 10.<\/p>\n
But over the past month, its ADRs have fallen about 10% amid a broader pullback in semiconductor stocks.<\/p>\n
SK Hynix sees AI memory demand outpacing supply through 2030<\/p>\n
SK Hynix expects demand for memory chips to remain stronger than supply through 2030 as technology companies continue investing in AI infrastructure.<\/p>\n
The company said its latest HBM4 memory chips, which began mass production and shipments in the third quarter, are expected to surpass the previous-generation HBM3E in both revenue and shipments in the fourth quarter.<\/p>\n
HBM4 is the sixth generation of high-bandwidth memory, designed to handle the large amounts of data processed by advanced AI chips.<\/p>\n
Average selling prices for DRAM increased by a high-20s percentage from the previous quarter, helped by higher conventional memory prices and a growing share of HBM4 products.<\/p>\n
Also read: Meta stock falls despite Wall Street analysts raising price targets<\/p>\n
Shipments of server DDR5 memory chips also rose more than 40% sequentially.<\/p>\n
SK Hynix said it has secured long-term agreements with 14 major customers covering more than 50% of its production capacity for 2027 and 2028.<\/p>\n
The company plans to significantly increase investment next year to expand production.<\/p>\n
Management described a “virtuous cycle… in which AI-driven productivity gains… lead to greater AI adoption, which in turn drives increased investment in infrastructure.”<\/p>\n
“As the drivers of AI investment move beyond the early stage, when a small number of companies accounted for most of it, and broaden to include general enterprises and nation-level initiatives, the global AI data center infrastructure market will continue to grow steadily,” the company said in a statement.<\/p>\n
SK Hynix also announced plans to return about 100 trillion won to shareholders, including at least 30 trillion won in cash dividends and 60 trillion won in share buybacks and cancellations.<\/p>\n
The company approved a third-quarter dividend of 14 trillion won, partly funded by gains from its investment in Japanese chipmaker Kioxia.<\/p>\n
“We intend to return the gains realized from our investment in Kioxia this year to our shareholders through a special dividend,” CEO Kwak Noh-Jung said during the earnings call.<\/p>\n
Year-to-date, SK Hynix’s South Korea-traded stock is up 128%.<\/p>\n
NurPhoto \/ Getty Images<\/p>\n
Wall Street raises SK Hynix price targets after earnings<\/p>\n
Rosenblatt raised its price target on SK Hynix to $400 from $320 while maintaining a Buy rating, according to The Fly.<\/p>\n
The firm pointed to stronger DRAM pricing, noting that average selling prices increased 20% from the previous quarter.<\/p>\n
Also read: Intel stock surges on JPMorgan upgrade after 14% weekly plunge<\/p>\n
RBC Capital analyst Srini Pajjuri maintained an Outperform rating and a $200 price target.<\/p>\n
RBC said annual price negotiations for 2027 have been completed and estimated that HBM prices increased 80% to 100%, which could continue supporting the company’s average selling prices.<\/p>\n
Susquehanna analyst Mehdi Hosseini reiterated his Neutral rating, saying he preferred Micron Technology (MU) and Samsung Electronics because of their more diversified businesses.<\/p>\n
Still, he acknowledged that SK Hynix shares appeared undervalued and said he favored the company’s U.S.-traded shares over its South Korean listing.<\/p>\n
“I would prefer the ADR in the U.S.,” Hosseini said in a CNBC interview. He questioned whether there were enough additional buyers in the Korean market.<\/p>\n
Related: Cathie Wood sells $16 million of surging tech stock<\/p>\n
#Analyst #revamps #Hynix #stock #price #target #blockbuster #earnings<\/p>\n","protected":false},"excerpt":{"rendered":"
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