Disclaimer: This article is for informational purposes only and does not constitute financial advice.
Investment Thesis and Target Price
DS Investment & Securities maintains a Buy investment rating and a Target Price of 3,100,000 KRW (~$2,168 USD based on 1430 KRW/USD) for SK Hynix. Despite recent market skepticism regarding AI infrastructure investment and subsequent price corrections, the brokerage believes the semiconductor cycle is far from over. The valuation is supported by the expectation that quarterly operating profit will continue to grow through the fourth quarter of 2027. The analyst notes that there are no signals of oversupply and suggests the stock has the potential to attempt new all-time highs by the first half of 2027, following historical upcycle patterns.
Earnings Estimates and Financial Preview
For 2Q26, SK Hynix recorded revenue of 79.3 trillion KRW (~$55.45B USD), up 51% QoQ, and an operating profit of 60.3 trillion KRW (~$42.17B USD), up 60% QoQ. The operating profit margin (OPM) reached 76%, exceeding the brokerage’s estimate of 75%. For 3Q26, the operating profit estimate has been revised upward to 78 trillion KRW (~$54.54B USD), representing a 29% QoQ increase with an OPM of 79%, driven by favorable exchange rates and increased shipments. Full-year forecasts are highly bullish, with 2026 operating profit projected at 267 trillion KRW (~$186.7B USD, +467% YoY) and 2027 operating profit projected at 415 trillion KRW (~$290.2B USD, +55% YoY).
Key Semiconductor Drivers and Outlook
The company’s profitability was bolstered by significant increases in Average Selling Prices (ASP), with DRAM and NAND ASPs estimated to have risen 30% and 57% QoQ, respectively. A key driver was the surge in sales of server-oriented LPDDR products, including SOCAMM2. Looking ahead, the brokerage expects ASPs to remain robust as the company increases the production proportion of general-purpose DRAM in the second half of the year. Regarding High Bandwidth Memory (HBM), SK Hynix has begun mass production of HBM4 for major customers as of 2Q26, with yields and quality comparable to HBM3E. Samples for HBM4E have been delivered, with full-scale mass production targeted for 2027. Additionally, the company emphasized that AI infrastructure investment will remain steady as efficiency gains in AI models typically drive broader service adoption and increased overall usage.
🔗 Original Source: View the official filing/article here.