SK Hynix: Analyst Targets Surge on Structural Shift as Supply Squeeze and Samsung Strike Add Fuel

SK Hynix sees record profit forecasts amid a deepening supply shortage and looming Samsung strike, but stock dips 8% after a 169% rally.

The stars are aligning for SK Hynix in a way few memory chip makers have seen before. Within weeks, three major investment banks have raised their price targets, a massive strike at its biggest rival is about to begin, and the industry is facing its most severe supply shortfall in years. Yet the stock, after a 169% rally since January, has already started to take a breather — falling nearly 8% on Friday to 1,819,000 Korean won.

Nomura Securities led the upgrade parade in mid-May, lifting its target to 4 million won. The bank sees artificial intelligence inference demand driving a structural super-cycle for memory, and it argues SK Hynix is deeply undervalued on a forward price-to-earnings multiple of roughly six times — a steep discount to TSMC’s roughly 20 times. Nomura forecasts operating profits of 281, 394, and 480 trillion won for 2026 through 2028. JPMorgan followed on May 17 with a 3 million won target, raising its earnings estimates for that same period by 9% to 20%. Mirae Asset Securities had earlier set a goal of 2.7 million won.

JPMorgan’s revised valuation framework is particularly telling. The bank has abandoned the price-to-book metric for semiconductor stocks in favor of a P/E multiple of 8x, citing long-term supply agreements between cloud providers and memory manufacturers that structurally reduce earnings volatility. The days of wild boom-bust cycles may be fading, and the market is beginning to price in that stability.

That thesis is reinforced by a deepening supply crunch. KB Securities and Nomura both warn of extreme scarcity, noting that no major new production lines are scheduled to come online before 2027. Goldman Sachs describes 2026 as the worst supply shortage in 15 years. The gap between available chips and insatiable AI demand is only widening. SK Hynix itself expects an operating margin of 78% this year — an industry-leading figure that reflects the explosive pricing power in both DRAM and NAND. Kioxia, a NAND specialist, anticipates a price increase of more than 40% in the second quarter alone, confirming that the storage market is emerging from a prolonged slump as an independent growth engine.

Competition is about to become even more favorable. Starting Thursday, roughly 50,000 Samsung Electronics employees plan to walk off the job for 18 days in what would be one of the most disruptive labor actions ever seen at the world’s largest memory maker. A sustained production loss at Samsung hands SK Hynix a direct opportunity to capture additional market share in high-bandwidth memory — precisely the sector where demand is most acute.

The company is not resting on its laurels. First samples of the next-generation HBM4E memory are expected to leave factories in the second half of this year, with volume production slated for 2026. This puts SK Hynix on track to maintain its technological lead as hyperscalers continue to push for faster and denser chips.

After Friday’s pullback, the stock now sits about 8% below its 52-week high reached on May 13. The relative strength index has eased to roughly 69, still technically near overbought territory. The 50-day moving average, a key support level, currently stands at around 1,160,000 won — a long way down from current prices. A break of that level could trigger further selling.

Investors also have a near-term date on the calendar. The shares go ex-dividend on May 28, with a quarterly payout of 750 won per share confirmed by management. The payout is supported by a strong cash position, and parent company SK Square — itself the recipient of a raised target of 1.3 million won from JPMorgan — plans to use more than 30% of its dividend income from 2026-2028 for buybacks and share cancellations.

Yet the risks are real. The Wall Street Journal warned on May 17 of a possible bubble in AI memory, noting that rapid capacity expansions could eventually lead to oversupply. Meanwhile, the Korean market remains volatile: the KOSPI plunged more than 6% after approaching the 8,000-point mark on May 15, driven by foreign selling tied to rising US bond yields. JPMorgan’s assumption of a free cash flow of roughly 240 trillion won for SK Hynix between 2025 and 2027 explicitly depends on the price cycle holding up — a condition that, in this industry, can change without warning. For now, though, the convergence of analyst upgrades, a supply squeeze, and a rival’s labor turmoil gives the bull case uncommon momentum.