[Edaily Reporter Park Jeong-soo] On the 9th, KB Securities maintained its “Buy” rating and target price of 3.8 million won for #SK Hynix, noting that the increase in memory demand driven by the spread of artificial intelligence (AI) is gaining momentum. In particular, the firm emphasized that the recent stock price correction presents a buying opportunity as it has confirmed a short-term bottom.
Kim Dong-won, Head of Research at KB Securities, analyzed, “As the AI agent market rapidly expands from cloud-centric platforms to edge devices such as PCs and mobile devices, demand for HBM, server DRAM, enterprise SSDs, and LPDDR5X is entering an acceleration phase.”
KB Securities projected that the memory supply shortage will intensify in 2027. It forecasted that token usage will increase sevenfold over the next year due to the spread of AI agents, and as the monetization of the token economy gains momentum, Big Tech companies’ investments in AI servers and the expansion of memory capacity will continue for an extended period.
Second-quarter earnings are expected to exceed market expectations. KB Securities estimated SK Hynix’s second-quarter revenue at 89.4 trillion won and operating profit at 69 trillion won. This represents year-over-year increases of 302.2% and 649.3%, respectively. The operating profit margin is projected to reach 77.2%, the highest level among global companies.
The firm also analyzed that rising DRAM and NAND prices will drive earnings improvement. KB Securities expects the average selling prices (ASPs) for DRAM and NAND to rise by 50% and 60%, respectively, in the second quarter. In particular, since the launch of new memory production lines is scheduled for 2027 or later, the firm forecasts that demand will continue to outpace supply through next year.
The firm assessed the recent sharp drop in stock prices as an overreaction. Kim, the head of the division, stated, “Although the stock price has fallen by 20% over the past three days due to concerns about potential U.S. interest rate hikes and the AI industry reaching its peak, there are absolutely no signs of a peak in terms of AI investment or earnings.” He added, “Considering the 12-month forward price-to-earnings ratio (PER) of 4.4x, this correction presents a buying opportunity as it confirms a short-term bottom.”