SK Hynix Posts Record Profit, Yet the Stock Keeps Sliding — Here’s Why

SK Hynix posts best-ever quarterly profit with 557% surge, but shares plunge 14.6% as earnings miss estimates and AI chip demand concerns mount.

The numbers were spectacular. The market reaction? A collective shrug.

SK Hynix reported its best-ever quarterly profit on Wednesday, posting an operating income of 60.54 trillion won (roughly $41.6 billion) for the second quarter — a staggering 557% surge from a year earlier. Revenue climbed 257% to 79.32 trillion won, and the operating profit alone already exceeds the company’s full-year operating profit for fiscal 2025.

The driver was a relentless rally in memory-chip prices, particularly for high-bandwidth memory (HBM) used in AI servers. Both DRAM and NAND-Flash prices rose quarter-over-quarter, with premium products leading the charge. In the first half of the year, SK Hynix crossed the 100 trillion won revenue threshold for a six-month period for the first time in its history.

Yet the stock barely budged on the news — and for good reason. The damage had already been done the day before.

A 14.6% Rout That Reshaped the Narrative

On Tuesday, SK Hynix shares plunged 14.65% to close at 1,550,000 won, marking one of the worst single-day drops in the company’s history. The sell-off erased 41% of the stock’s value over the preceding 30 days and left it trading 48% below its June 25 peak of 2,987,000 won.

The rout wasn’t confined to Seoul. Samsung Electronics lost more than 13% on the same day. In Japan, Tokyo Electron fell 10.96%, Advantest dropped over 10%, and Kioxia — a NAND-Flash maker in which SK Hynix recently sold its stake — cratered more than 18%. Taiwan Semiconductor Manufacturing Co. slipped nearly 3%. The VanEck Semiconductor ETF had already shed more than 2% on Monday, extending losses from the prior Friday.

In the US, Nvidia opened in the red before recovering, while Intel closed nearly 6% lower, AMD fell 8%, and Micron and Seagate each lost more than 8%. Western Digital dropped almost 7%, and Sandisk tumbled 14%.

Why Record Earnings Didn’t Save the Day

Despite the headline numbers, SK Hynix missed analyst expectations. The LSEG SmartEstimate consensus — a weighted average that gives more influence to consistently accurate forecasters — had called for operating profit of 64 trillion won. The shortfall stemmed from the company’s heavy focus on high-end memory for data centers, which meant it captured less of the broader price rally across the memory sector than some rivals.

Net profit told a more complex story. It surged more than 13-fold to 93.92 trillion won, but a large chunk came from a one-off non-operating gain of 60.9 trillion won, which the company attributed to investment profits without providing specifics. Kim Sunwoo, an analyst at Meritz Securities, suspects this reflects cumulative gains from the sale of SK Hynix’s stake in Kioxia, completed last month.

The Real Fear: Is the AI Cycle Peaking?

The sell-off reflects a deeper anxiety that goes beyond any single quarter’s results. SK Hynix and Samsung are among the world’s largest suppliers of HBM chips for AI servers, making their stocks acutely sensitive to any shift in expectations around capital spending by US hyperscalers.

Owen Lamont, Senior Vice President at Acadian Asset Management, says the violent moves in SK Hynix underscore the uncertainty surrounding the AI investment cycle. “Nobody knows how AI will ultimately affect the economy,” he noted, adding that the development path is likely to remain bumpy. He also pointed to leveraged exchange-traded products in Korea, Hong Kong, and the US as potential amplifiers of the volatility.

Sundeep Gantori, Chief Investment Officer for Equities at Standard Chartered, cited recent media reports about China’s ambitions in memory chips and lithography equipment as a factor darkening sentiment toward the entire semiconductor sector. Still, he remains bullish long-term: the market is large enough for multiple players to coexist and profit as the AI investment cycle continues to support leading technology companies.

What Investors Are Watching Now

Portfolio managers say the earnings report alone won’t drive the stock from here. Kim Minji of Must Asset Management told Bloomberg that investors are focusing on whether SK Hynix will boost shareholder returns — through buybacks, for example — and whether hyperscalers will keep raising their capital expenditure.

Andy Wong of Pictet Asset Management framed the central debate differently: the market is questioning whether memory makers like SK Hynix are capturing too much of the value in the AI supply chain. The question is whether that perception of excessive margins will shift.

Not everyone is bearish. Shawn Oh of NH Investment & Securities called SK Hynix an attractive buy, citing its cheap valuation and the deleveraging trend among Korean retail investors. But he acknowledged that some institutional investors have been reducing their exposure in the near term.

The stock now trades roughly 29% below its 50-day moving average but remains 33% above its 200-day average — a wide spread that suggests the long-term uptrend is still intact, even if the short-term pain is acute. The next move will likely hinge less on the historic profit figures already released and more on management’s guidance around investment discipline and shareholder returns.