SK hynix shares drop as record AI-driven profit misses market expectations
South Korea’s SK hynix posted a record 1,242 percent jump in second-quarter net profit, but its shares fell sharply as investors weighed revenue misses against the long-term sustainability of artificial intelligence infrastructure spending.
South Korean memory chipmaker SK hynix reported a 1,242 percent year-on-year surge in second-quarter net profit, reaching 93.9 trillion won (€56.9 billion). Despite this record performance, the company’s shares closed 9.6 percent lower in Seoul on Wednesday.
The sell-off followed revelations that quarterly revenue of 79.3 trillion won (€48 billion) and operating profit of 60.5 trillion won (€36.6 billion) fell short of market expectations. The stock had already tumbled 14 percent on Tuesday, contributing to a 33 percent decline over the month leading up to the earnings release.
Investors are increasingly questioning whether the breakneck growth in artificial intelligence infrastructure can be sustained. Geopolitical friction in the Middle East has further spooked markets, amplifying concerns over a potential tech valuation bubble.
Company executives pushed back against fears of an impending slowdown in capital expenditure. Park Joon-deok, marketing chief of the AI microchip division, addressed concerns about clients renting data-centre capacity or adopting more efficient AI models. He stated that the firm views these developments as a process of maximising the utilisation of existing infrastructure and accelerating its monetisation.
The stellar net profit figure was partially inflated by a one-off gain from the sale of a portion of SK hynix’s stake in Japanese flash-memory maker Kioxia. Nevertheless, the company attributed its core growth to expanding demand for high-bandwidth memory required by complex AI systems.
SK hynix plans to invest approximately 40 trillion won (€24.2 billion) this year to meet mounting supply requests. The company maintains that as AI services generate revenue, the underlying momentum for memory demand will persist.
The earnings report follows aggressive capital moves by the broader SK Group. The parent conglomerate recently announced a $500 billion (€438.6 billion) collaboration with Nvidia to invest in AI infrastructure. Additionally, SK hynix raised $26.5 billion (€22.8 billion) earlier this month via a massive US depositary receipt offering.
Market Outlook
Despite the near-term stock volatility, some analysts remain bullish on pricing power. KB Securities analyst Kim Dong-won forecast that memory chip prices will rise at least 30 percent in the third quarter. He noted that supply shortages are expected to persist until 2028.
Market attention now shifts to SK hynix’s larger domestic rival, Samsung Electronics, which is scheduled to report its quarterly earnings on Thursday. Samsung has previously forecast an approximate 1,800 percent year-on-year increase in its second-quarter operating profit.
