Ren
Head of AI, Ex-Product Manager, AI Supply-Chain Bottlenecks
Sold-out HBM and cash returns make SK hynix look too cheap for a memory cycle that has not ended. Its HBM capacity is sold through 2027, 12-layer HBM4 is shipping, and next year's HBM prices are forecast to rise 121%. A completed ₩40T buyback adds shareholder returns; a special dividend funded by a Kioxia stake sale is possible. At roughly 4x earnings by one estimate, the shares could go higher if the AI memory cycle persists. x.com
SK hynix's 38% drop from its June 25 high is one of the biggest discounts seen, while nothing about the company or the memory thesis has changed. It holds about 56.4% of HBM, was first to HBM4 mass production, and posted Q1 revenue up 198% with a 71.5% operating margin; consensus sees Q2 operating profit of 65.5 trillion won, up 74%. Nvidia signed a multi-year co-development deal. At about 6x forward earnings it is cheap, though memory always looks cheapest at the top as earnings peak. x.com
SK hynix's signed long-term cloud contracts give its AI-memory demand greater visibility and may support sustained pricing. Fourteen agreements cover over 50% of 2027-28 production capacity; HBM4 shipments are ramping, with the company expecting HBM4 to exceed HBM3E in volume and revenue by Q4 2026. AI-memory cash generation and Kioxia investment gains also underpin planned 2026 shareholder returns of about 100 trillion won, including dividends and buybacks. x.com x.com
SK hynix stands to benefit from higher HBM prices as supply remains constrained. Needham expects HBM price increases next year and tight memory supply through 2030; SK hynix has finalized 2027 HBM prices and volumes with major customers. SK hynix also plans roughly KRW100 trillion in FY2026 shareholder returns, including at least KRW30 trillion in dividends and KRW60 trillion in share acquisitions and cancellations. x.com x.com
Memory makers' long-term agreements cannot protect pricing when buyers regain leverage. The market underestimates downside even before a price collapse; SK hynix's agreements price within market-linked ranges, per @jukan05. The agreements will be ripped apart when the market turns to buyers, at the latest when China ramps. SK hynix, Samsung, Micron, SanDisk and Kioxia are exposed. x.com
SK hynix should reprice strongly because its blowout earnings make the case that memory is structurally different now. At the current earnings pace, it would earn back its entire market cap in two years; buybacks and dividends also return cash to shareholders and add to value. x.com
SK hynix's enforceable long-term supply commitments add visibility to memory profits. It says DRAM and HBM volumes through 2029 are effectively sold out, with agreements covering over half of 2027-28 capacity while retaining pricing flexibility. Operating profit beat expectations at $62.8B versus about $58B, and SK hynix announced $75B in 2026 shareholder returns. It expects the memory shortage to persist through 2030. x.com
SK hynix's plan for more shareholder returns looks like the beginning of the end for the company. In a historically cyclical industry, giving money away instead of investing to avoid that cyclicality signals it can't find anywhere else to put its incoming cash. SK hynix said it is considering additional shareholder return measures, with details due in the third quarter. x.com x.com x.com
SK hynix's earnings and buybacks could drive a tripling by 2027 before a re-rating, on Jonah Lupton's assumptions. Its Q3 report expects memory demand to outpace supply through 2030 as advanced processes and fab lead times constrain growth. It plans about KRW 100 trillion in FY2026 shareholder returns, including KRW 60 trillion or more in share acquisitions or cancellations; the buybacks would first reduce shares outstanding. x.com x.com x.com x.com x.com x.com
Tight memory supply keeps the AI memory supplier trade in bill-of-materials names if it persists. The investor aleabitoreddit reports an SK hynix shortage outlook through 2030 and an operating-margin result near 80%. HBM allocation and average-selling-price guidance are the next tests; Korea has already priced the earnings print, so the next move depends on who locks capacity. x.com
Inflation, rising rates, Chinese competition and rising AI-related financial costs are pressuring the memory market. Micron, Samsung and SK hynix look exposed; waiting for the cycle to turn. x.com x.com
SK hynix has unusually strong earnings visibility because it expects memory demand to exceed supply through 2030, while long-term agreements with 14 customers cover more than half of its 2027 and 2028 production capacity. Record Q3 operating profit of KRW 83.3T also beat the KRW 76.7T estimate. x.com x.com
