SK Hynix’s 5.2 Times Earnings: The AI Memory Boom’s Most Underpriced Bet

SK Hynix trades at 5.2x forward earnings despite 171% YTD rally, as HBM memory and AI partnerships drive explosive profit growth and analyst upgrades.

The sizzling rally in SK Hynix shares has a baffling subtext: for all the excitement, the stock still trades at just 5.2 times expected earnings over the next twelve months. That disconnect between soaring profits and a modest multiple is precisely what is driving analysts to tear up their price targets. Citigroup now sees the stock climbing to 3.1 million won, implying another 82.4% upside, while KB Securities has revised its target to 2.8 million won. The common thread is a memory market that has turned into a gold rush for high-bandwidth chips.

Since the start of the year, SK Hynix has already gained 171%, and the past 30 days alone have added 90% to the price tag. On Wednesday, the stock closed at 1,976,000 won, up 7.68% on the day and touching an intraday high of 1,990,000 won. Yet the forward price-to-earnings ratio remains stubbornly low because earnings estimates are being revised upward even faster than the share price. “It’s a combination of rising profit expectations and a still-reasonable valuation that is unlocking this rerating,” Citigroup’s analysts noted after lifting their target from 1.7 million won.

The catalyst is High Bandwidth Memory, the specialised DRAM used to feed data into AI accelerators. SK Hynix commands 57% of the global HBM market and is the sole supplier of HBM3E chips for Microsoft’s Maia AI accelerator, a chip that packs 216 GB of memory with 7 TB/s of bandwidth. That relationship puts the South Korean company at the centre of the most important AI infrastructure buildout. CEO Kwak Noh-jung is set to attend the Microsoft CEO Summit, where talks with Bill Gates and Satya Nadella are expected to deepen the strategic partnership.

Pricing power is exploding. Citigroup forecasts HBM average selling prices will rise 30% quarter-on-quarter in the fourth quarter, and for standard DRAM and NAND, the bank expects price increases of 200% and 186% respectively in the second half of the year. Data from TrendForce already shows DRAM prices jumping 63% and NAND prices climbing 75% in the second quarter. The knock-on effect on operating profit is dramatic: KB Securities projects 67 trillion won in operating income for the current quarter, rising to 270 trillion won for the full year, with 418 trillion won pencilled in for the following year.

Supply constraints are becoming structural. TSMC’s CoWoS packaging technology, which dominates the AI chip assembly market, is facing severe bottlenecks. That has prompted unconfirmed reports that SK Hynix is exploring Intel’s EMIB packaging technology as an alternative. Neither company has commented, but the logic is clear: tech giants are desperate to secure capacity and are even offering to co-finance new fabrication plants. Goldman Sachs predicts the most severe DRAM undersupply in 15 years by 2026, while SK Group Chairman Chey Tae-won has warned that wafer shortages could persist into 2030. For SK Hynix, that means pricing leverage that extends well beyond a typical memory cycle.

Technically, the stock is stretched. It sits 76.36% above its 50-day moving average, and the relative strength index is at 68.9 – a level that signals strong momentum but leaves little room for disappointment. The real test will be whether the promised price increases actually flow through to profit margins, and whether customers like Microsoft remain willing to pay a premium for guaranteed supply. So long as HBM scarcity and AI infrastructure spending continue to reinforce each other, SK Hynix remains one of the most direct – and still attractively priced – bets on the memory boom.