Enthusiasm for South Korean memory chipmaker SK Hynix is surging on Wall Street following its American debut, overcoming a recent pullback in semiconductor stocks. Several investment banks began formal research coverage of SK Hynix on Tuesday, touting the company’s dominance in highly sought-after memory components like DRAM, NAND and HBM. Analysts at Cantor Fitzgerald see more than 100% upside for the stock, projecting a $300 price target versus Monday’s close of $142.72, as the artificial intelligence buildout continues. “We see these drivers leading to bit demand for both DRAM and NAND well in excess of supply into CY29, if not longer,” C.J. Muse at Cantor wrote to clients Tuesday. SKHY 5D mountain SK Hynix 5 day While Cantor is the most bullish on SK Hynix stock, measured on the basis of price targets, it’s not alone in its zeal. Bank of America has a $250 target; Stifel is at $240; and RBC Capital Markets is at $200. Wall Street’s confidence in the memory sector is rebounding following a sell-off over the last month, spurred partly by profit-taking from momentum traders and deleveraging by hedge funds. Memory chips have proven to be a primary pinch point in tech supply chains during the AI buildout, enabling steep price increases and wider profit margins. Locking in supply Traditionally, memory is a volatile upstream sector that often behaves more like a commodity than a technology business. But the AI buildout has changed the structure of the industry, with customers like Nvidia and Alphabet buttressing their demand with more long term contracts. “Customers now [lock] in supply several years out, with some agreements including volume, pricing, pricing corridors, up-front cash payments and financial repercussions if customers do not follow through with agreed-upon purchases,” Muse at Cantor wrote. “This has led to structurally higher profitability, longer visibility, and allows for better planning for both customers and memory makers.” Margins and pricing power in the memory sector are eventually expected to compress as supply increases to meet demand, but analysts don’t see that happening for some time. RBC sees operating margins at Hynix rising to 86% next year, up ten percentage points from 76% in the second quarter. Key risks to Hynix’s prospects, according to Stifel, include technological obsolescence and an overconcentration of demand from hyperscaler customers. “A handful of large U.S. hyperscalers (spending > $600B capex in CY26) represent a majority of this. As with any concentration, there is a risk factor here in spite of the multi-year conviction in the thematic AI growth outlook,” analyst Brian Chin at Stifel wrote on Tuesday. SK Hynix American depositary receipts began trading on a when-issued basis on Nasdaq on July 10, raising about $26.5 billion through the sale of 178 million shares, according to Bank of America.
