SK Hynix's latest financial results show a dramatic surge in profits, yet they fell short of analyst forecasts, causing a significant stock price drop.
Driven by AI demand, SK hynix reported record-breaking performance for the second quarter. However, both revenue and operating profit failed to meet market expectations, despite a more than tripling in revenue year-over-year. The stock experienced a sharp decline on Wednesday as the quarterly figures, while exponentially higher, did not satisfy the sky-high expectations analysts held for this AI-focused chip company.
Here is a comparison of SK hynix's second-quarter results against the Refinitiv Smart Consensus, which weights forecasts from analysts with a higher historical accuracy rate:
Revenue: 79.32 trillion Korean won (approximately $545.5 billion), compared to the market expectation of 84 trillion won.
Operating profit: 60.54 trillion won, compared to the market expectation of 64 trillion won.
The stock plunged as much as 15% during the session before closing 9.6% lower. Its American depositary receipts, listed on the Nasdaq, recently fell 3.4%.
The company's financial report reveals that for the quarter ending June 30, revenue surged 257% year-over-year, while operating profit skyrocketed nearly 557%. Sequentially, revenue increased by 51% and operating profit rose 61%. SK hynix stated that the global expansion of AI infrastructure investment continues to fuel robust demand, with prices for high-performance memory products tailored for AI servers reaching new highs, driving overall price increases. The company's cumulative revenue for the first half of the year surpassed 100 trillion won for the first time, setting a record since its founding and directly reflecting the strong procurement demand from the AI industry.
SK hynix indicated that its capital expenditure for 2026 will approach over 40 trillion won. Earlier this month, its Nasdaq-listed ADRs began trading, which will serve as a foundation for enhancing its global capital strategy. The company stated that its future priorities include investing in growth businesses, maintaining a healthy financial structure, and continuously evaluating shareholder return plans such as dividends and share buybacks. Regarding capacity planning, the company plans to maximize output by fully utilizing its two existing plants in Icheon and Yongin, while also expanding its Cheongju facility to boost NAND flash memory capacity and advanced packaging lines.
Josh Gilbert, a market analyst at eToro, commented that the company's 83% gross margin is sufficient proof of its strong pricing power. "Only a market where supply is tight and customers are scrambling to secure inventory can achieve such high margins; an industry with declining demand would not show this performance." Both DRAM and NAND flash memory prices increased sequentially this quarter. The company's focus on high-value-added products like HBM (High Bandwidth Memory), AI server-specific DRAM, and enterprise SSDs has driven volume shipments, achieving industry-leading profitability. With AI services continually generating revenue and major tech companies increasing their investment in computing infrastructure, the procurement momentum for memory chips is expected to persist, with customer stocking orders continuing to grow.
SK hynix's self-developed HBM4 demonstrates a differentiated technological advantage, with notable energy efficiency and cost benefits. The company began mass shipments of HBM4 in the second quarter and plans to further ramp up production in the second half of the year. It also completed the delivery of HBM4E samples in the first half. In its NAND flash business, SK hynix is accelerating the transition to advanced process nodes, focusing on high-capacity, high-performance product lines. The 321-layer NAND flash is now the company's main mass-produced product, with a target to increase its share of the company's total domestic South Korean production capacity to around 50% by year-end.
This South Korean memory giant primarily produces memory chips, with its products supplying data centers, smartphones, and various other consumer electronics. Major US tech companies like Nvidia are among its core clients. The two parties recently signed a long-term supply agreement valued at over $500 billion, further scaling up their collaboration.
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