SK Hynix Proves That Sometimes a 76% Profit Margin Isn't Enough

Dow Jones07-29 17:11

SK Hynix reported a record operating profit of 60.54 trillion won (about $41.66 billion) in the second quarter, up 557% from the a year earlier. Its operating margin was 76%, up from 41% a year earlier.

That all sounds "pretty healthy," as analysts at Jefferies put it with a dose of understatement. And yet the memory-chip giant's shares closed down nearly 10% (they're still up well over 100% for the year).

Analyst expectations for operating profit were even higher, and the miss fueled investors' concerns that SK Hynix's rival Samsung is pricing its products more aggressively, Jefferies wrote. Bulls had also been hoping for a share buyback, the bank added.

Ahead of earnings from Microsoft and Meta later today, SK Hynix's results are "a lesson in just how high the bar now sits for anything tied to AI," said Josh Gilbert, an analyst at trading platform eToro.

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