An xPU model at the SK Hynix Inc. booth during the Semiconductor Exhibition in Seoul, South Korea.
SeongJoo Cho/Bloomberg via Getty Images
SK Hynix reported record profits for the third quarter, sending its stock higher.
Its blowout quarter has sparked new momentum for top chip names on Wednesday.
“SK Hynix is single-handedly rescuing investor sentiment today,” one source said.
SK Hynix is giving chip stocks a fresh boost on Wednesday.
The South Korean chipmaker, a poster child of the boom in memory stocks, reported record earnings on Tuesday. The company posted third-quarter results that showed a stunning 632% year-over-year profit increase to over $62 billion, blowing past Wall Street estimates for both revenue and operating profit. The blockbuster results sent SK Hynix up nearly 11% in Korea, whiles its US-listed depositary receipts jumped 10%.
The stellar report also generated new momentum for chips stocks broadly on Wednesday, as the company also said that demand would outpace supply of memory chips for the foreseeable future.
“SK Hynix is single-handedly rescuing investor sentiment today,” said cross asset analyst Nic Puckrin. “It just reported a 328% jump in revenue, while operating profit is up a staggering 632%. But the most important part is that it’s finally given investors a glimpse of a bright future. It says virtually all its memory production capacity is already spoken for through 2029.”
SK Hynix’s earnings smash is boosting a corner of the AI trade that’s been on shakier ground lately. The iShares Semiconductor ETF is down about 8% in a month as investors worry about a host of issues facing the AI buildout, including tighter debt markets and question marks about demand.
The Korean chipmaker’s results are proving a bullish catalyst, though. Fellow South Korean chipmaker Samsung rose 9% in Korea.
Some of the top chip movers in US markets include:
Micron Technology : +3.5%
Intel : +2%
Arm Holdings : +2%
Broadcom : 2%
Advanced Micro Devices : +1.5%
Sector leader Nvidia edged up a little less than 1%. The Roundhill Memory ETF rose 4.5%.
SK Hynix’s results come a week after South Korea’s market flashed a more bearish that rattled the AI trade locally and in the US. AI cloud platform Elice, viewed as the nation’s hottest initial public offering of the year, cratered 32% in its trading debut, sparking worries about investors’ willingness to continue buying richly priced AI stocks.
Its plunge sent both SK Hynix and Samsung tumbling, but the Wednesday’s earnings smash has put both South Korean chipmakers back in the spotlight. Samsung is scheduled to report earnings on Thursday, October 29 and now even more eyes will be closely watching.
“These two corporations, together with the US’s Micron Tech, are responsible for around 90% of all memory chip design and manufacture,” noted David Morrison, chief market strategist at Trade Nation. “So taken together, they are a reliable barometer measuring the strength or fragility of this vital component in AI infrastructure development.”
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