Valuation Shift Underpins SK Hynix’s Rally as Analysts Target 4 Million Won

Goldman Sachs abandons price-to-book for P/E framework, lifting SK Hynix target to 3.5M won. HBM supply constraints through 2028, record Q1 2026 revenue, and iHBM thermal tech drive momentum.

The way analysts value SK Hynix is undergoing a fundamental transformation, and the stock is pricing it in. Goldman Sachs has abandoned the traditional price-to-book approach for a price-to-earnings framework, lifting its target to 3.5 million won. SK Securities went even further, slapping a 4 million won target on the shares — a level that implies nearly 70% upside from the current 2.36 million won. The reasoning: supply constraints across DRAM, NAND, and high-bandwidth memory are expected to persist at least through 2028, creating a “higher-for-longer” pricing environment that justifies the switch in valuation methodology.

Those constraints are not theoretical. Goldman estimates the combined operating profit of Samsung and SK Hynix will exceed 1,000 trillion won by 2028, with SK Hynix alone contributing 454 trillion won. The engine behind that forecast is HBM, where SK Hynix controls roughly 57% of global revenue and 62% of shipment volumes. The company has reportedly locked in two-thirds of Nvidia’s HBM orders for the upcoming Rubin platform. Analyst Han Dong-hee of SK Securities pointed to long-term supply agreements as a key driver, with HBM prices expected to climb more than 50% in 2027 alone. The so-called “dual-market effect” — tight supply in both high-performance and standard memory simultaneously — should push operating profit to 272 trillion won in 2026 and 423 trillion won in 2027.

The stock’s surge is already reflecting those expectations. Shares closed at a fresh 52-week high of 2,363,000 won on the day the targets were raised, extending year-to-date gains to 249%. The relative strength index sits at 69, and annualized volatility is running at 78% — numbers that typically make investors nervous, but the momentum has been relentless.

Against this backdrop, SK Hynix delivered a record first quarter in 2026. Revenue topped 50 trillion won for the first time, operating profit hit 37.6 trillion won, and the operating margin reached 72%, with net margin at 77%. The company attributed the strength to insatiable AI demand and a rising mix of premium-priced products. Management acknowledged that demand continues to exceed their own delivery capacity. That record quarter also enabled a dividend: shareholders of record on May 31, 2026 receive 375 won per share, for a total payout of approximately 265.76 billion won. While modest relative to earnings, the decision to return cash while simultaneously ramping investment — M15X expansion, the Yongin cluster, EUV equipment procurement — signals confidence that this is not a one-off quarter.

The dividend is fleeting. The longer-term catalyst is thermal management. In late May, SK Hynix unveiled iHBM, an architecture that integrates cooling elements directly into the HBM package. The company claims it reduces thermal resistance by more than 30%. For AI servers running under constant load, heat dissipation is becoming the bottleneck — and solving it wins design wins at hyperscaler customers. Investors are betting that iHBM will extend SK Hynix’s lead in the memory hierarchy.

A minor operational incident temporarily disrupted the narrative. On the morning of June 1, a fire started in a gas room between the M15 and M15X factories in Cheongju. The sprinkler system extinguished it by 10:32 a.m. local time, but a 5 ppm hydrofluoric acid leak forced the evacuation of 3,600 workers. Production resumed by 1:38 p.m., and the company confirmed no output losses. Susquehanna, which maintains a more cautious 2.5 million won target, argued that capacity constraints limit further relative upside compared to peers.

South Korea’s broader economic picture supports the bullish case. Total exports hit a record $87.8 billion in May 2026, a 53% year-on-year jump, while the KOSPI index closed at an all-time high of 8,788 points. For SK Hynix, the second half of 2026 should bring rising shareholder returns as cash flows expand in lockstep with those export records. The question that will determine whether this is a new standard or an exceptional quarter is whether AI demand can keep absorbing the capital spending required to maintain the company’s dominant position.