SK Hynix’s $500 Billion Nvidia Pact: A Lifeline for a Stock That Lost Half Its Value

SK Hynix posts 557% profit surge but stock plunges 9% on missed estimates, then reverses on $500B Nvidia deal. Oversold RSI signals deep concern.

The numbers were staggering: revenue up 257%, operating profit soaring 557%, and a record-breaking quarterly performance. Yet when SK Hynix reported its second-quarter results on July 29, the market’s initial reaction was anything but celebratory. The stock tumbled more than 9% in after-hours trading before staging a dramatic reversal that left it 2% higher by the close.

That whipsaw captures the schizophrenia gripping one of the world’s most important semiconductor stocks. SK Hynix has been caught between historic operational success and mounting anxiety about whether the artificial intelligence boom that fueled its ascent has already peaked.

The Numbers That Weren’t Enough

For the quarter ended June 30, SK Hynix posted revenue of 79.32 trillion Korean won — a 257% surge year-over-year and an all-time high. Operating profit hit 60.54 trillion won, representing an eye-popping 76% margin. In the first half alone, the company crossed the 100 trillion won revenue threshold for the first time in its history.

But analysts had penciled in even loftier figures: roughly 84 trillion won in revenue and 64.2 trillion won in operating profit. That gap — modest in absolute terms but significant in a market obsessed with perfection — triggered the initial sell-off.

The stock now trades at 1,312,000 won, down more than 50% from its June peak of nearly 3 million won. The 14-day relative strength index has fallen to 31.6, deep in oversold territory. From the 52-week high of 2,987,000 won set on June 25, the decline exceeds 56%.

Samsung’s Shadow Looms Larger

The competitive landscape darkened further when Samsung Electronics reported its own results on July 30. Samsung posted 171.5 trillion won in revenue and 89.5 trillion won in operating profit — a 1,814% year-over-year profit surge. More troubling for SK Hynix: Samsung announced it is already shipping HBM4E samples to key customers and has locked up 60% to 70% of its future fabrication capacity through multi-year supply agreements.

That narrows the technology gap that SK Hynix had long enjoyed as the dominant supplier of high-bandwidth memory to Nvidia and other AI giants. The market is now pricing in a future where Samsung catches up, potentially compressing SK Hynix’s margins and market share.

A $500 Billion Bet on the AI Future

Just one day after the earnings release, SK Hynix’s parent company, SK Group, unveiled a sweeping partnership with Nvidia valued at more than $500 billion. The framework agreement covers the construction of AI factories and the supply of next-generation memory chips, giving SK Hynix a long-term offtake guarantee that extends years into the future.

The deal provided the catalyst for the stock’s intraday reversal. On the earnings call, management explicitly rejected the notion that AI investment is peaking, instead guiding capital expenditures for 2026 toward the upper end of the 40 trillion to 50 trillion won range. That means SK Hynix is accelerating spending on HBM and other AI-related products, not pulling back.

The Spending Blitz

The company has outlined a series of projects designed to cement its leadership:

• Yongin semiconductor cluster: Construction of the first fab is being accelerated, with the clean room scheduled to open in early 2027.
• M15X fab in Cheongju: Production start has been pulled forward to meet sustained DRAM and HBM demand.
• Long-term contracts: More than ten major customers have signed multi-year supply agreements providing planning visibility through 2027 and beyond.

SK Hynix ended the quarter with 88 trillion won in cash and a net cash position of 69.4 trillion won. Management says it is evaluating additional shareholder return measures as financial flexibility improves.

Regional Markets Catch the Bid

The recovery rippled beyond SK Hynix. South Korea’s Kospi index gained as much as 2.76%, while Japan’s Nikkei 225 pushed above 63,000 points. Samsung Electronics shares also rallied, lifting the entire domestic semiconductor complex.

The relief rally follows what Bloomberg described as an extraordinary rout. The stock had lost 47% from its June record high, wiping out nearly $600 billion in market capitalization — a decline comparable to the entire valuation of SpaceX. Analysts attributed the sell-off to overcrowded positioning and a spike in margin-driven volatility.

What the Charts Say

Despite the carnage, SK Hynix shares remain up roughly 100% year-to-date. The stock trades 21.75% above its 200-day moving average, a statistical oddity that underscores how dramatically positioning has shifted in recent weeks.

For now, the market appears willing to give management the benefit of the doubt. The Nvidia partnership provides revenue visibility that few competitors can match. The capex commitment signals confidence that AI demand will remain robust through the end of the decade.

But the core question persists: Has the AI investment cycle already passed its inflection point? The next few quarters of earnings will reveal whether SK Hynix’s record spending and strategic alliances are enough to hold off Samsung’s advance — and whether the stock’s halving was a buying opportunity or a warning.