SK Hynix's 48% Slide Puts a Record Quarter Under the Microscope

SK Hynix's record Q2 revenue and profit fail to impress, stock drops 48% from peak amid AI chip sell-off and supply concerns.

The arithmetic is almost impossible to square. SK Hynix just posted one of the strongest quarters in its corporate history — revenue up 257 percent year on year, operating profit soaring nearly 557 percent — and yet the stock has shed roughly half its value since late June. That disconnect, more than any single data point, defines the current mood around the memory-chip giant.

Shares last changed hands at 1,550,000 won after slipping 1.08 percent on the day, leaving the equity 48.11 percent below the record high of 2,987,000 won touched on June 25. The 30-day slide alone amounts to 33.85 percent. A second data point from another trading session put the stock at 1,537,000 won, roughly 48.5 percent off that same peak and nearly 29 percent beneath its 50-day moving average of about 2.16 million won. The annualized 30-day volatility stands at a staggering 149 percent.

A Quarter That Couldn't Satisfy the Market

The trouble began with the numbers themselves. Second-quarter revenue of 79.32 trillion won came in well shy of the 84 trillion won analysts had penciled in, according to LSEG estimates, and the operating profit missed forecasts as well. The initial reaction was a 9.6 percent single-day drop. What followed was broader carnage: the entire chip complex shed more than a trillion dollars in market capitalization this week, with SK Hynix, Samsung Electronics and Micron collectively losing around 462 billion dollars — 176 billion of it from SK Hynix alone, 173 billion from Samsung and 113 billion from Micron.

The sector-wide nature of the sell-off has prompted a debate about whether this is a technical correction or something more structural. Acadian Asset Management reads the violent swings as evidence that investors are increasingly uncertain about the durability of the entire AI investment cycle. One analyst characterized a similar two-day move as "portfolio rotation rather than a deterioration in industry prospects," while another framed the sell-off as a repricing of stretched expectations following an extraordinary rally — not a signal of fading AI demand. The stock still trades nearly 29 percent above its 200-day average, keeping the long-term uptrend technically intact.

The Bull Case: Scarcity Still Rules

Optimists point to a market that remains fundamentally undersupplied. Management reports that key customers continue to request additional memory, and short-term supply cannot be expanded easily given the complexity of HBM and AI-server memory manufacturing and the long lead times for new fab construction. The entire 2026 production run of HBM, DRAM and NAND is already sold out.

Goldman Sachs estimates SK Hynix controls roughly 58 percent of global HBM revenue and expects the company to maintain its dominant position in HBM3 and HBM3E at least through 2026, defending a market share above 50 percent across the HBM segment. For Nvidia's upcoming Rubin platform, UBS sees SK Hynix capturing around 70 percent of HBM4 volumes; other estimates range from 60 to 70 percent. A DigiTimes report citing multiple industry sources suggests HBM4 pricing could more than double next year to 4 to 5 dollars per gigabit, up from roughly 2 dollars per gigabit in the second half of 2026.

The gross margin of 83 percent in the latest quarter lends credence to the scarcity narrative. Josh Gilbert of eToro notes that such margins don't emerge in weak-demand markets — they're the product of customers competing for limited supply. Nvidia remains a cornerstone buyer through a multi-year agreement, and the broader 500-billion-dollar cooperation with the SK Group is intended to secure long-term demand, even if it hasn't dampened near-term volatility.

The Bear Case: Cyclicality Catches Up

Pessimists aren't arguing that AI demand is collapsing. Their concern is timing: investment growth is slowing while new production capacity gradually comes online. Memory chips have always been cyclical, and the pattern is familiar — a period of scarcity attracts new entrants, supply catches up, and prices and margins compress sharply.

Some market observers expect exactly that for HBM, with a possible correction after 2026 driven by intensifying competition and expanded capacity from late-arriving DRAM manufacturers. The breadth of the current drawdown is telling: Micron, Samsung, SK Hynix and the Roundhill Memory ETF are all more than 20 percent below their recent highs, pushing one of 2026's hottest trades into bear-market territory.

Even Samsung's exceptionally strong earnings failed to stem selling, suggesting robust fundamentals alone no longer satisfy market expectations. Then there's the Chinese factor: CXMT's recent Shanghai IPO has investors worried that its rapid expansion could depress memory chip prices. If CXMT scales capacity as quickly as promised, the very pricing power underpinning the bull case could erode.

The Fixed-Price Dilemma and a Legal Overhang

A more technical concern complicates the bull narrative. SK Hynix's HBM supply contracts with major customers are fixed-price agreements. That provides revenue visibility but caps the upside from spot-market price spikes. Meanwhile, DRAM average selling prices have risen more slowly than expected — even slower than commodity DRAM — raising questions about pricing power despite robust shipment growth. Any weakness in conventional DRAM and NAND flows straight through to margins.

Adding to the uncertainty is a class-action lawsuit filed June 25 in a U.S. federal court in California. The plaintiffs allege SK Hynix, Samsung and Micron colluded to restrict DRAM supply. The companies haven't yet responded in court, the claims are unproven, and the case remains in its early stages — but it introduces a legal risk that could weigh on sentiment as it progresses.

What Comes Next

The near-term path likely hinges on macro headlines and shifting sentiment around AI spending rather than the company's own fundamentals. The next concrete catalyst arrives in the fourth quarter, when Samsung, SK Hynix and Micron are expected to finalize HBM supply contracts and pricing for 2026. Management has also signaled it will address capital return plans within the year once a final decision is made.

For now, the technical picture offers conflicting signals. The RSI sits at 40.8 — neither oversold nor bullish. A pullback toward the 100-day moving average of roughly 1.69 million won could attract buyers betting on structural HBM scarcity, while a further deterioration in sentiment could push the stock toward the 200-day average around 1,192,520 won. Given the extreme volatility, investors should probably brace for more of the same: sharp swings in both directions until the contract season provides clearer answers.