[Edaily Reporter Park Sun-Yeop ] SK hynix is once again drawing attention as a key beneficiary of growing demand for artificial intelligence (AI) memory. Analysts say the company must move beyond its reputation as a traditional memory cycle industry as it enters a “full-stack memory” phase, where demand is spreading beyond high-bandwidth memory (HBM) to include DRAM and NAND.

In a report released on the 2nd, Kim Un-ho, an analyst at IBK Investment & Securities, maintained a “Buy” rating on SK hynix(000660)and raised the target price by 122% from 1.8 million won to 4 million won. This figure is based on a price-to-earnings (P/E) ratio of 10 times the 12-month estimated earnings per share (EPS) of 411,454 won.

Analyst Kim stated, “SK hynix’s quarterly earnings are expected to exceed forecasts for the 11th consecutive quarter, from the fourth quarter of 2023—when HBM took off—through the second quarter of this year,” adding, “The market continues to significantly underestimate memory demand.”

IBK Investment & Securities projected SK hynix’s second-quarter revenue this year at 78.968 trillion won, a 50.2% increase from the previous quarter, and operating profit at 61 trillion won, a 62.3% increase. DRAM revenue is projected to rise 45.6% from the previous quarter, while NAND revenue is expected to increase by 66.6%. In particular, NAND operating profit is estimated to more than double from the previous quarter to 13.9 trillion won.
At the heart of this earnings improvement lies the proliferation of Agent AI. The report analyzed that Agent AI models require far more tokens than generative AI and simultaneously drive up demand for CPUs, DRAM, and NAND during task execution. It explained that while existing AI infrastructure was centered on GPUs and HBM, the Agent AI era will see a higher proportion of CPU-based tasks, leading to a corresponding increase in host DRAM demand.
The potential for expanded NAND demand was also emphasized. The report concluded that as Agent AI performs multi-step tasks, the demand for KV cache storage is surging, thereby increasing the role of SSDs. Researcher Kim assessed, “Once demand shifts from HBM to DRAM, we will see explosive growth in NAND demand,” adding, “NAND hasn’t even gotten started yet.”
However, the pace of HBM4 market expansion is expected to be somewhat slower than previously anticipated. Due to the delay in the launch of NVIDIA’s Rubin, the forecast for this year’s HBM market size was lowered from 37.1 billion Gb to 34.1 billion Gb. Nevertheless, the report projected that the impact on DRAM operating profit margins would be limited, as the reduced share of HBM4 would alleviate initial profitability pressures.
The analysis also suggests there is significant room for a revaluation. According to the report, SK hynix trades at a P/E ratio of 8 times based on this year’s expected EPS, which is low even when compared to AI-related materials, components, and equipment companies. Analyst Kim pointed out, “It is preposterous to still view an industry expected to grow tenfold over seven years as a cyclical industry and use that to justify its current valuation.”
From a supply-and-demand perspective, the report noted that selling by institutional and foreign investors is holding back the stock price. It explained that domestic institutions are forced to reduce their holdings when the stock price rises due to portfolio investment limits, while foreign investors are also selling to rebalance their portfolios following the sharp rally in the Korean stock market.
SK hynix’s ADRs, which are set to begin trading on the U.S. Nasdaq market on the 10th, were also seen as a potential factor in driving up valuations. Analyst Kim said, “Since SK hynix can be directly compared to Micron, a competitor in the same industry, we expect the ADRs to command a higher valuation than the domestic shares.”