SK Hynix's 405% Profit Surge Flips the Valuation Table on Samsung as Scarcity Deepens

SK Hynix Q1 operating profit soars 405% to 37tn won, forward P/E edges past Samsung for first time amid tightest DRAM supply in 15 years and tech giant investments.

The memory chip landscape has been turned on its head. SK Hynix’s first-quarter operating profit exploded to over 37 trillion won — a 405 percent leap from a year ago — and the market is now pricing its shares at a higher forward multiple than Samsung’s for the first time. The expected P/E for 2026 stands at 6.79, just a whisker above Samsung’s 6.77, yet the symbolism is seismic.

That valuation inversion is underpinned by an operational margin of 72 percent, a figure that even Nvidia cannot match. The engine behind those margins is a near-complete sellout of capacity across DRAM, NAND and HBM production. Goldman Sachs estimates the DRAM supply gap at 4.9 percent — the tightest the industry has seen in 15 years.

Tech titans are scrambling to lock down future output. Microsoft, Google and Amazon are reportedly preparing direct investments in SK Hynix’s fabrication lines, with Microsoft particularly anxious to secure HBM3e memory for its Maia AI chip. The shortage is so acute that the company cannot fulfill all customer orders, a state of affairs that has historically forced valuations higher across the memory sector.

The stock has responded in kind. After briefly touching 2.0 million won in pre-market trading on Thursday, SK Hynix shares settled at 1,970,000 won — a slight daily dip of 0.3 percent that does little to diminish a staggering run. Over the past 30 days the stock has climbed 78.6 percent; since the start of 2025 the gain is 190.99 percent. UBS recently lifted its price target from 1.55 million to 1.7 million won, while SK Securities notes that the twelve-month forward P/E, despite the rally, sits at just 5.2.

The wealth flowing into the company is reshaping South Korea’s labour market. SK Hynix has overtaken Hyundai and Samsung as the country’s most sought-after employer, with tens of thousands of applicants chasing roles tied to projected bonus payouts equal to 10 percent of earnings. With full-year operating profit expected to reach the hundreds of trillions of won, the potential bonuses are extraordinary — so much so that engineering courses offering job guarantees now draw more applicants than medical schools.

Yet the valuation crown is fragile. Samsung remains the most credible challenger. The rival has qualified for Nvidia’s new Vera-Rubin platform, though its yield on current HBM4 chips trails SK Hynix’s 80 percent DRAM rate. If Samsung can launch mass production of HBM4 in the second half of 2026, SK Hynix’s market share could fall to between 50 and 60 percent, analysts warn. To insulate itself, SK Hynix is building new capacity in Cheongju and Yongin, but those plants will not come online until mid-2027.

Samsung’s relative weakness has been compounded by a deepening labour dispute. After failed mediation talks, the threat of an 18-day strike looms. JPMorgan estimates that higher wage demands could shave 7 to 12 percent off Samsung’s operating profit, a headwind that has helped tilt the valuation scales in SK Hynix’s favour. The gap was 2.80 P/E points just three months ago; now it has reversed completely.

The rally has also concentrated Korea’s benchmark index. SK Hynix and Samsung together now account for 51.5 percent of the KOSPI200, up from 38.7 percent at the start of the year. That 12.8 percentage-point swing underscores how two memory stocks have come to dominate the market — and how vulnerable the index is if the scarcity premium begins to unwind. For now, though, SK Hynix is riding the tightest supply cycle in a decade and a half, and investors are paying a premium for the privilege.