SK Hynix Shares Plummet Despite Record Second-Quarter Earnings

SK Hynix, the world's second-largest memory chipmaker, posted a record operating profit of 60.5 trillion won ($41.2 billion) for the second quarter, with an operating margin of roughly 76%, driven by surging demand for AI server memory chips and gains linked to its stake in Japan's Kioxia. Despite the blockbuster results, the company's shares continued to slide on the Korea Exchange, extending a sharp decline that has wiped out more than half of its market value since a record high in late June.

The earnings mark the company's fifth consecutive quarter of record profit, underscoring how deeply the artificial intelligence boom has reshaped demand for high-bandwidth memory and other AI-related chips. SK Hynix said sustained investment by major technology firms in AI infrastructure continued to drive additional orders, and it expects the momentum in memory demand to persist through the rest of the year.

Yet investors have reacted with caution rather than enthusiasm. Even though the headline profit figure set a new record, it came in below market expectations, prompting several brokerages to reassess their outlook for the stock. Analysts at NH Investment & Securities and Shinhan Securities were among those who cut their target prices, pointing to lingering uncertainty over whether SK Hynix has locked in enough long-term supply agreements with customers to guarantee stable earnings in coming years.

NH Investment & Securities analyst Ryu Young-ho said the market remains skeptical about the durability of these long-term deals, warning that it would take time to rebuild investor confidence, as he lowered his target price for the stock. Shinhan Securities analyst Kim Hyung-tae similarly revised down his profit estimates for SK Hynix through 2027 to reflect a more conservative outlook on chip prices, while trimming his own target price for the shares.

Not all analysts share the bearish view. Some brokerages, including Korea Investment & Securities, argued that the shortfall versus consensus stemmed mainly from delayed shipments rather than weakening demand, suggesting the missed volume could instead boost third-quarter results. Those analysts raised their target prices, betting on an eventual rebound.

The stock's slide has also been amplified by newly launched leveraged exchange-traded funds tied to SK Hynix and rival Samsung Electronics shares, which critics say have fueled speculative trading and heightened volatility on the Seoul market. The broader sell-off has coincided with growing unease over increasing competition from Chinese memory makers such as newly listed CXMT, adding another layer of uncertainty to the outlook for South Korea's chip sector.