Burak Finance
Head of Analytics, Growth Investor, PLTR/NBIS/RKLB
SK hynix's contracted capacity gives its AI-memory demand case more visibility. It reported an 80% operating margin on ₩104.6 trillion of revenue, with sales more than quadrupling year over year and over half of 2027 and 2028 capacity under long-term contracts. Vertiv's sales grew 61%, orders more than doubled, and it raised full-year guidance again; so far, AI demand is still accelerating. x.com
SK hynix's record ₩40 trillion buyback and cancellation signal management's view that the stock undervalues its AI memory cash machine. Starting the day after a 9.8% drop, it shrinks the share count by about 3.3%, mechanically lifting EPS about 3.4%, and should provide steady buying pressure for the next three months. Management also raised its shareholder return target to over 50% of free cash flow through 2027. 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
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
Deployment limits will slow AI hardware spending and expose cyclical suppliers such as SK hynix. Amazon has hardware waiting for power, and Broadcom's CEO said some clients delayed shipments because they could not deploy. Cheap forward multiples can mark a cyclical peak as analysts extrapolate growth. The slowdown could have begun or be a year away; timing is uncertain, so reducing cyclical risk in favor of healthier, genuinely cheap names looks better. x.com x.com x.com
SK hynix's exceptional margins and contracted capacity underpin a bullish outlook despite shares sitting around half their June high. Q3 operating margin reached 80%, up from 47% a year ago; long-term deals with 14 customers cover over half of 2027-28 capacity, and management expects demand to exceed supply through 2030. x.com
SK hynix's five-year agreements with 14 major customers cover more than half its 2027-28 capacity, giving its memory earnings unusually long visibility. DRAM prices rose 28% and NAND 25% in the quarter, while operating profit reached 62.8 billion against 58.5 billion expected; Q4 DRAM shipments are guided up 25% from Q3. Those commitments support the view that demand is not peaking yet. Overweight, $400 target. 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's strong pricing and secured capacity could push memory stocks higher. Per Wall St Engine, its Q3 DRAM ASP rose by a high-20s percentage quarter over quarter, while long-term agreements cover more than half of its 2027-28 capacity. Those figures support the memory upcycle. x.com
SK hynix's contracted capacity and demand outlook make its record quarter hard not to like. Agreements with 14 major customers cover over half of 2027-28 capacity; it expects demand above supply through 2030. Q3 revenue of $78.8B and operating profit of $62.8B beat $74B/$58B Street estimates, its first quarter above ₩100T with near-80% margins. It guides roughly ₩100T in FY26 shareholder returns, including a ₩20,000 Q3 dividend, half a one-off Kioxia special. x.com
China's domestic market lets YMTC and CXMT threaten Micron, Samsung Electronics and SK hynix without entering US products. China receives 15-25% of smartphones and PCs and is on a path to at least 20-30% memory share over the next several years; current leaders are much too optimistic. History suggests at least a near-term semiconductor rally even if the AI trade has topped. It likely has not: agentic AI should give the trade room to run into 2027. x.com x.com x.com
SK hynix's contracted volumes make revenue more dependable than margins. LTAs cover over half of 2027-28 capacity, but not all demand through 2029 is signed, and prices still move within agreed ranges. Big customers' 2027 HBM volume and pricing are settled; HBM4 yields are ahead of plan. Server DDR5 shipments rose over 40% quarter on quarter, though most of the earnings beat came from pricing. Management expects the HBM profit premium over regular DRAM to narrow next year. x.com
