SK Hynix Reports Historic Profits, but the Market Is Focused on China and a 50% Stock Rout
Published on 07/29/2026 at 06:12 | Redaktion boerse-global.de
The numbers coming out of SK Hynix are the kind most companies only dream of. Revenue for the second quarter of 2026 hit 79.32 trillion won, a 257% surge from a year earlier and a 51% jump from the prior quarter. Operating profit skyrocketed 557% to 60.54 trillion won, pushing the operating margin to a record 76%. For the first time, the company’s half-year revenue crossed the 100 trillion won threshold.
Yet the stock closed at 1.377 million won on the day of the earnings release, down 11.16%. Over the past week, the shares have shed 24.75%, and the monthly decline stands at a staggering 47.60%. From the June peak of 2.987 million won, the equity has now lost 53.90% of its value.
The disconnect between the financials and the share price is stark, but it’s not without explanation. Analysts had expected operating profit closer to 64 trillion won, according to LSEG SmartEstimate. SK Hynix’s heavy focus on specialized AI memory chips meant it was more exposed to a recent slowdown in pricing for that segment, even as competitors built out capacity in more traditional memory products.
A Chinese Rival and a Market-Wide Panic
The sell-off that has hammered SK Hynix didn’t start with its own outlook. The trigger came from across the Yellow Sea. ChangXin Memory Technologies (CXMT) staged a spectacularly successful initial public offering in China, and reports emerged that a state-linked Chinese firm had already begun producing immersion lithography systems for chip manufacturing. For South Korean investors, the implication was immediate and unsettling: a well-funded rival with accelerating technological capabilities could flood the DRAM market.
Should investors sell immediately? Or is it worth buying SK Hynix?
The broader market felt the shockwave. On Tuesday, SK Hynix plunged 14.65% in a single session, while Samsung Electronics lost more than 13%. The KOSPI index dropped 10.8% — its worst day in roughly five months. The rout continued Wednesday, with SK Hynix falling another 4.06% to 1.487 million won before the earnings release.
Mirae Asset Securities analysts framed the reaction as less about CXMT’s current profitability and more about the fear of a rapid capacity expansion and technological catch-up following the IPO. South Korea’s top financial regulator has already begun reviewing restrictions on leveraged single-stock ETFs if volatility persists.
HBM4 Contracts Already in the Pipeline
While the market panics, SK Hynix is quietly locking in its next generation of business. The company has started mass production of HBM4, the sixth generation of high-bandwidth memory, and has shipped samples of the next iteration, HBM4E, to key customers. Series production of HBM4E is slated for 2027.
Crucially, SK Hynix is already negotiating supply contracts for 2027 with major tech companies, aiming to secure demand well ahead of competitors. Pricing for HBM4 is being negotiated individually with each customer, factoring in not just standard DRAM pricing and supply dynamics but also the investment and opportunity costs of HBM development. The company has signed multi-year supply agreements with roughly ten large international clients.
The management is also ramping up investment. The capital expenditure budget for 2026 is expected to land at the upper end of the previously guided 40 trillion won range. Expansion of the M15X fab in Cheongju is underway, and capacity additions at the Yongin site are being accelerated.
Cash Pile Grows as Debt Shrinks
The record quarter has done wonders for the balance sheet. Cash and equivalents rose to 88 trillion won, an increase of 33.6 trillion won from the previous quarter. Meanwhile, debt was reduced by 0.7 trillion won to 18.6 trillion won, leaving a net cash position of 69.4 trillion won.
For the third quarter, management expects DRAM bit shipments to rise roughly 10% and NAND shipments to increase 3%. Demand for high-performance memory for AI servers remains robust, driven by a new generation of more complex, agent-based AI services, the company said.
Analysts Split on Whether This Is a Buying Opportunity or a Warning
The Wall Street reaction is far from uniform. Morgan Stanley, Mirae Asset, and KB Securities have all described the sell-off as a buying opportunity, pointing to price-to-earnings ratios of just two to five for a company posting record profits.
SK Hynix at a turning point? This analysis reveals what investors need to know now.
Others urge caution. Owen Lamont of Acadian Asset Management cited "incredible uncertainty" about how AI technology will ultimately affect the broader economy, adding that no one really knows where the process is headed. He also noted that leveraged exchange-traded products could amplify market swings, though they are not solely responsible for SK Hynix’s volatility.
ADRs Hit New Lows
The carnage has extended to SK Hynix’s American Depositary Receipts, which listed on the Nasdaq just this month. On Tuesday, the ADRs fell below the psychologically important $130 level, closing at $130.49 — a record low since the listing. The shares are now fighting to stay above their issue price.
Technical indicators paint a mixed picture. The relative strength index of 34.8 suggests an oversold condition. The stock trades roughly 32% below its 50-day moving average but remains 27% above the 200-day average. Despite the recent rout, the shares are still up 128.88% year-to-date — a reminder of just how extreme the trajectory has been in both directions.
For the third quarter, analysts expect memory chip prices to rise at least 25%, driven by persistent HBM shortages that could extend through 2028. Whether that fundamental support will be enough to halt the sell-off may depend on how the market interprets SK Hynix’s ongoing HBM pricing negotiations for 2027.
Ad
SK Hynix Stock: New Analysis - 29 July
Fresh SK Hynix information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
