SK Hynix is ​​out of memory by 2029 and projects shortages by 2030 after record operating profit

SK Hynix reported that its production of conventional and high-bandwidth memory (HBM) is sold out until 2029 and that the shortage is expected to persist until 2030. The announcement came along with a quarterly earnings report above expectations, released in South Korea, and was read by the market as a robust signal of demand for artificial intelligence infrastructure.

According to the Yahoo Finance report, the company reported operating profit of 62.5 billion (in dollars, as mentioned in the transcript) in the quarter ended in September, an increase of approximately seven times and more than 7% above projections. The company also announced an additional $4 billion in share repurchases and dividends for the remainder of the fiscal year, in addition to what had already been announced.

Reporter Jake Conley called management's statement the demand signal investors were looking for. Presenter Julie Hyman, however, drew attention to the stock's reaction: the company usually releases good results every quarter, and the stock doesn't always rise. This time, the increase was around 7%, a gain she considered modest by SK Hynix standards.

Relief after the fall

In Hyman's opinion, the movement reflects the market's moment: the results may already be partially priced in, but, after a strong recent drop, the reaction seems more like a sign of relief. The rally extended to the Kospi index and other memory stocks. Pras Subramanian recalled that the stock fell 24% in the previous month, not counting the day's trading session.

The presenters also linked the AI ​​sector's recovery to recent news, including Anthropic's S-1 filing, which they said changed the narrative on Monday. For the group, the fact that a relevant customer of chip suppliers has around US$100 billion in cash suggests that the sector's financing is more solid than previously assumed.

There were reservations. One of the participants recalled that the S-1 does not cancel out the widening of credit spreads observed during the week nor the signs of pressure on so-called neoclouds. In his reading, large companies, such as hyperscalers, SK Hynix and Anthropic, may be in a better situation than they were two weeks ago.

A historically cyclical sector

Hyman recalled that the memory business is historically very commoditized and cyclical: manufacturers expand excess capacity and then pull back. According to her, the current revaluation of shares is linked to the signing of long-term contracts and the greater revenue visibility that companies have today, something unprecedented in the sector. One of the presenters compared the phenomenon to that of a mining company like Freeport-McMoRan, whose shares soar when demand for copper increases.

The market now turns its eyes to Samsung, the largest memory manufacturer in the world, which subsequently releases results. Together, Samsung and SK Hynix would, according to the presenters, provide a comprehensive portrait of the sector. One of them follows the Roundhill Memory ETF, created in April, which has fallen 37% since its June high. Participants considered that the fund is very exposed to the results of SK Hynix, Micron and Samsung.

Quoting investor Gavin Baker, one of the presenters said that the demand for computing power for AI is so strong that it cannot be fully met, and that renting a cluster has become more expensive than it was six months ago. He himself noted, however, that the story evolves quickly and that the situation could change within a month.

Automatically translated from Portuguese.