KB Securities said on the 9th there are no signs of a peak for SK hynix and analyzed that the recent 20% share-price correction is a short-term bottom. It maintained a "Buy" rating and a target price of 3.8 million won. SK hynix closed at 1,911,000 won the previous day.
SK hynix shares fell 20% over the past three days on concerns about possible rate hikes following strong U.S. employment at SK hynix America and worries about a peak in the artificial intelligence (AI) industry.
Kim Dong-Won, head of research at KB Securities, said, "However, the strong jobs data is judged to be due to increased construction job supply from data center expansion, not a U.S. economic recovery, and from the perspective of AI investment and earnings, there are no signs of a peak at all," and added, "In particular, considering comprehensively the entry into an accelerating phase of memory demand and a 12-month forward price-earnings ratio (PER) of 4.4 times, within the memory bull cycle this price correction is seen as a buying opportunity that confirms a short-term bottom."
KB Securities projected that as the AI agent market rapidly expands from cloud-centric to PCs and mobile, memory demand will enter an accelerating phase across high bandwidth memory (HBM), server DRAM, enterprise SSDs, and LPDDR5X.
By contrast, it judged that memory supply in 2027 will face a deeper shortage than this year, leaving ample room for continued price increases. In addition, the spread of AI agents was expected to increase token usage sevenfold over the next year. As monetization of the token economy begins, it projected that big tech companies' AI server demand and the trend of expanding memory content per system will continue for a long time.
Meanwhile, SK hynix's second-quarter operating profit was expected to be 6.9 trillion won, up 649% from a year earlier. The operating margin was projected at 77.2%. This would rank No. 1 worldwide in operating margin.
Deputy Minister Kim said, "In the second quarter, DRAM and NAND prices are each rising 50% and 60%, far exceeding market consensus (average forecasts), and operating margins are expected to reach 81% for DRAM and 66% for NAND," adding, "In particular, considering that full-scale operation of new memory production lines is scheduled for 2027 or later, at least through next year memory demand will continue to outstrip supply, effectively entering an era of zero supply."