SK Hynix’s 79.3% Margin Beats Nvidia, Yet $19.5 Billion in Foreign Selling Tests the Rally

South Korean chipmaker's HBM dominance drives record profits, but foreign investors sell $14B in shares; local retail and new leveraged ETFs add volatility.

SK Hynix just posted a gross margin that even Nvidia can’t match. The South Korean memory chip giant’s first-quarter figure of 79.3% comfortably eclipsed the 74.9% that Nvidia reported for the same period, underlining its grip on the high-bandwidth memory (HBM) market that powers the AI infrastructure boom.

Revenue for the quarter ended March 2026 reached 52.58 trillion won, a 198% surge from a year earlier. Operating profit came in at 37.61 trillion won and net profit hit 40.35 trillion won, both record levels. The balance sheet looked equally robust: cash and equivalents stood at 54.3 trillion won, up 19.4 trillion won from the prior quarter, while interest-bearing debt fell 2.9 trillion won to 19.3 trillion won. That gave SK Hynix a net cash position of 35 trillion won — ammo for the massive capital spending planned for the M15X fab, the Yongin cluster, and new EUV equipment.

Yet none of that has stopped a wall of foreign selling. In the 12 trading sessions through May 22, international investors offloaded a net 19.53 trillion won worth of SK Hynix shares. The selling was concentrated: together with Samsung Electronics, the two chip heavyweights accounted for 82.9% of all foreign net sales on Korea’s main bourse during that stretch. In the week ending May 22 alone, the outflow from SK Hynix reached 5.33 trillion won.

The sell-off looks less like a verdict on fundamentals and more like mechanical rebalancing. SK Hynix has rocketed 186.7% since the start of the year, and at 1,941,000 KRW it sits only 1.8% below its 52-week high. The 30-day annualized volatility is 75.5%, and the relative strength index (RSI) stands at 68.9 — elevated but not yet in overbought territory. Global portfolio managers whose weightings have drifted during the rally are trimming positions to stay within target ranges.

“This is institutional rebalancing, not a protest against the AI story,” one Seoul-based market observer said. “The stock has been one of the best performers globally; a bit of profit-taking is natural.”

Remarkably, the stock has held its ground. Over the past seven days it gained 5.5%, and over 30 days the advance is 58.8%. The resilience suggests that local retail investors — more than 14 million strong — are stepping in to absorb foreign supply.

A new wild card arrives on May 27 when 16 single-stock leveraged ETFs debut on the Korea Exchange. The products, offering 2x daily exposure to SK Hynix and Samsung Electronics, have already drawn a regulatory backlash. The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have banned aggressive marketing campaigns, forcing asset managers including Samsung Asset Management and Mirae Asset to cancel planned press conferences and client events.

The regulators’ concern is twofold. First, Korea’s ±30% daily price limit means a 2x leveraged fund could lose up to 60% of its value in a single session if the underlying stock hits the floor. Second, the “negative compounding” effect in volatile or sideways markets can erode returns even when the direct stock recovers. If SK Hynix falls 20% and then rises 25%, a direct investor breaks even, but the 2x ETF still sits in the red.

Despite the warnings, roughly 93,000 investors have already completed the mandatory high-risk product training required to trade these ETFs. Mirae Asset Securities estimates that net inflows from the new retail vehicles could reach 5.3 trillion won, a sum that would partly offset the foreign selling. A fee war has already broken out: several fund houses have slashed management costs to just 9.01 basis points to attract the country’s army of individual traders.

For now, SK Hynix finds itself in an unusual tug-of-war. On one side, record margins, a net-cash fortress, and insatiable demand for HBM and server DRAM. On the other, a multi-billion-dollar foreign exit driven by portfolio rotation into robot and energy-storage names such as Doosan Robotics and Samsung SDI.

Whether the selling pressure eases over the coming weeks will determine if the stock can finally pierce its all-time high. If it does, the leveraged ETFs could accelerate the move higher. If it doesn’t, the steep rally leaves little margin for error — even for a company that has just proved it can out-earn the world’s most valuable chipmaker.