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SK Hynix reported record-breaking second-quarter revenue, more than tripling year-on-year, fueled by soaring demand for AI infrastructure. However, the company’s impressive growth fell short of ambitious analyst estimates, leading to a significant drop in its stock price.
Despite the market’s apprehension, SK Hynix highlighted sustained demand for high-performance AI memory products and a strong first-half revenue exceeding 100 trillion won, underscoring its critical role in the ongoing AI boom.
SK Hynix, a leading memory chip manufacturer, saw its shares tumble on Wednesday despite reporting a substantial increase in second-quarter revenue. While the company achieved record revenue and operating profit growth, driven by the insatiable demand for artificial intelligence (AI) infrastructure, these impressive figures fell short of Wall Street's supercharged expectations.
The company reported second-quarter revenue of 79.32 trillion won ($54.55 billion), a significant leap that more than tripled year-on-year. However, this figure missed LSEG SmartEstimates of 84 trillion won. Similarly, operating profit soared nearly 557% year-on-year to 60.54 trillion won, but also fell short of the expected 64 trillion won.
In the wake of the earnings announcement, SK Hynix's stock experienced a sharp decline, closing 9.6% lower after an earlier drop of as much as 15%. This market reaction underscores the high bar set by analysts for companies positioned to benefit from the AI revolution.
Despite the market's reaction, the underlying business performance highlights robust demand. Revenue increased by 51% compared to the previous quarter, and operating profit saw a 61% jump. The company attributed this growth to sustained demand from expanding AI infrastructure investments, with high-performance products for AI servers driving price increases to a fresh record.
For the first time in its history, SK Hynix's cumulative revenue for the first half of the year surpassed 100 trillion won, a testament to the ongoing AI boom. The company also announced plans to increase capital expenditures to the high 40 trillion won range for the year and is exploring options for its ADR listed on Nasdaq.
SK Hynix emphasized its commitment to prioritizing investments in growth and maintaining a sound financial structure, while also reviewing shareholder return policies. Future production strategies include maximizing output at existing facilities in Icheon and Yongin, alongside boosting NAND production and advanced packaging capabilities in Cheongju.
Analysts noted the company's strong pricing power, with a gross margin of 83% indicating that demand continues to outstrip supply. Both DRAM and NAND flash memory prices saw quarter-over-quarter increases, driven by sales of high-value-added products such as High Bandwidth Memory (HBM), DRAM for AI servers, and enterprise SSDs.
The demand momentum for memory chips is expected to persist, fueled by ongoing AI services and substantial infrastructure investments from major technology firms. SK Hynix highlighted its HBM4 technology, noting its power efficiency and cost competitiveness, and has begun mass shipments while completing sample shipments of HBM4E.
In its NAND business, the company is accelerating its transition to advanced process nodes, with 321-layer products already dominating production and targeted to represent approximately 50% of domestic production capacity by year-end.
SK Hynix counts tech giants like Nvidia among its key clients. The company recently expanded its partnership with Nvidia through a multiyear deal reportedly worth over $500 billion, securing its position as a critical supplier in the AI hardware ecosystem.
