KB Securities said on the 15th that investments in artificial intelligence (AI) data centers are expected to increase over a long period, leading to a memory supply shortage that will continue at least through 2028 for SK hynix(000660). It kept a "Buy" rating and a target price of 4.2 million won. The previous session's closing price was 1.913 million won.
Lee Chang-min, an analyst at KB Securities, said, "Given the investment plans of big tech companies and explosive AI demand, data center investment will keep rising for an extended period," and noted, "The memory supply shortage will continue at least through 2028."
He added, "In particular, next year's capital expenditures will concentrate on HBM, effectively limiting the expansion of new production capacity (CAPA) for commodity memory," and predicted, "Because of long-term supply agreements (LTA) between big tech and memory companies that will kick into full gear starting next year, the memory supply that general customers feel next year will approach a practical 'supply zero (Zero)' level."
On concerns recently raised about investment cutbacks by big tech such as Meta, he assessed them as nothing more than temporary noise.
The analyst said, "This year Meta's AI investment is about 220 trillion won, accounting for about 20% of total AI investment by U.S. big tech," and explained, "Meta plans to secure a total of 14 GW of AI computing infrastructure by adding 7 GW next year following 7 GW this year, and the investment in the Hyperion data center in Louisiana will expand from the initially planned $10 billion to more than $50 billion in the future."
The pace of AI data center construction is also expected to more than double. The analyst said, "As the Federal Energy Regulatory Commission (FERC) approved a fast-track simplification of grid interconnection procedures, the interconnection period, which previously took more than five years, is expected to be shortened to about one to two years."
The analyst said, "Recently, SK hynix's share price fell 36% from the previous peak in just three weeks on concerns about a slowdown in AI investment," but assessed, "The essence of the AI industry's long-term growth path and the memory supply-demand environment has not changed compared with a month ago."
He emphasized, "The recent share price decline stems from psychological concerns, and excessive worries are actually a buying opportunity."