SK Hynix's Earnings Rocket Is Primed, But the KOSPI Had Other Plans

Despite Friday's 8% drop, SK Hynix's Q2 operating profit is expected to surge 660% to ~70T won, with analysts raising targets to 3M won. AI memory demand keeps production booked 18 months.

The KOSPI's one-day stumble of more than six percent on Friday erased nearly eight percent from SK Hynix's share price in a single session, yet the fundamentals underpinning the memory chip phenom have never looked more explosive. The broader index had briefly touched 8,000 points before a broad tech selloff dragged it back, leaving the stock at 1,819,000 Won. But beneath the surface, the profit outlook has turned almost surreal.

Analysts at KB Securities lifted their price target on SK Hynix to 3 million Won on Friday — their eighth upgrade this year — anticipating a second-quarter operating profit surge of 660.4 percent year-on-year to roughly 70 trillion Won. That would translate into an operating margin of 78.1 percent, a figure that would tower over Nvidia's 65 percent and TSMC's 58 percent in the same period. The bank's analyst Kim Dong-won described the environment as a "memory era of zero supply," with artificial intelligence demand for High Bandwidth Memory outstripping capacity for the foreseeable future.

Macquarie followed suit with a 61 percent target boost to 2.9 million Won, arguing that the global shortage of memory chips will persist beyond 2027. The bank sees HBM prices climbing more than 50 percent next year alone, underscoring why SK Hynix's production lines are fully booked for the next 18 months — a fact confirmed by CEO Kwak Noh-jung on Friday. To lock in that lead, the company has pulled forward the opening of its first-phase Yongin chip fab to February 2027 and is investing roughly 19 trillion Won in a new packaging facility in Cheongju.

The market's abrupt reversal on Friday came despite a flurry of bullish signals. SK Hynix dominates HBM with a roughly 70 percent market share, and its first-quarter revenue from Nvidia alone reached 7.78 trillion Won, accounting for 14.8 percent of total sales — a 60 percent jump from a year earlier. A second large customer, suspected to be Microsoft or Google, contributed another 12.4 percent. A Samsung Electronics strike beginning May 21 and lasting 18 days could further tighten supply, theoretically benefiting SK Hynix. Yet investors chose to focus on risks: a US-China summit ended without a formal agreement on Nvidia chip exports, and fresh tensions in the Strait of Hormuz sapped risk appetite.

Despite Friday's pullback, the stock remains up 168.69 percent year-to-date and has gained 60.12 percent over the past 30 days. The relative strength index of 68.9 suggests the name is running hot, but not yet overheating. KB Securities raised its year-end KOSPI target to 10,500 points, predicting that Samsung and SK Hynix together could generate up to 630 trillion Won in operating profit by 2026.

Separately, Macquarie flagged that SK Hynix is exploring an ADR listing in the United States and planning a share buyback of roughly 250 trillion Won over the next two years, though neither move has been finalized. On May 27, South Korea's financial regulator is expected to list double-leveraged products linked to SK Hynix, which could further amplify trading volumes and volatility. With a market capitalization approaching one trillion dollars, the chipmaker's next moves — on the factory floor and on Wall Street — will continue to command attention even as the KOSPI's mood turns sour.