SK Hynix shares tumble after a record rally as investors question whether AI valuations have run ahead of earnings. #
SK Hynix suffered its biggest one-day share price fall on record on Monday, wiping billions from the AI memory group's market value just one trading session after its high-profile Nasdaq debut, as investors stepped back from one of the market's most crowded artificial intelligence trades.
The South Korean chipmaker, widely viewed as Nvidia's leading supplier of high-bandwidth memory (HBM), slid more than 15% in Seoul, dragging the benchmark KOSPI sharply lower before weakness spread to AI-linked semiconductor stocks in the United States.
AI Chip Rally Hits Sudden Reverse #
SK Hynix's record slide came days after the company completed the largest first-time US share sale by a foreign issuer, with its Nasdaq-listed shares beginning trading under the ticker SKHY.
The selling extended beyond South Korea. US-listed SK Hynix shares dropped sharply in early trading, while memory chip makers including Micron, SanDisk, Western Digital and Marvell also fell as investors reassessed the AI hardware trade.
The broader semiconductor pullback followed months of gains driven by demand for AI infrastructure, particularly advanced memory used in Nvidia's accelerators and hyperscale data centres.
Profit-Taking Meets Lofty Expectations #
The immediate catalyst appeared to be a research note from Korea Investment & Securities, which projected that SK Hynix's second-quarter operating profit could fall short of consensus forecasts despite remaining sharply higher than a year earlier.
Analyst Chae Min-suk said SK Hynix's greater reliance on high-bandwidth memory, or HBM, meant its average selling price was rising more slowly than the broader memory market because long-term HBM supply contracts leave less room for rapid price increases.
However, Chae said that should change as production of next-generation HBM4 chips ramps up.
'From the third quarter, when HBM4 begins full-scale mass production and sales, the ASP increase will be in line with the market average,' he said.
Korea Investment & Securities estimated that average selling prices for DRAM and NAND memory rose about 30% and 50%, respectively, from the previous quarter.
The report prompted some investors to take profits after SK Hynix's AI-driven rally.
Volatility Spreads From Seoul to Nasdaq #
The decline underlined the growing connection between Asian and US technology markets.
The KOSPI fell nearly 9% after a market-wide circuit breaker was triggered, with large semiconductor companies accounting for much of the move.
Nic Puckrin, founder of Coin Bureau, said the market reaction extended beyond South Korea.
'SK Hynix is importing South Korea's market volatility into the Nasdaq,' he wrote on X. 'This is a reminder of how intertwined global markets have become.'
Valuation Reset or First Crack in the AI Trade? #
While the sell-off unsettled investors, some analysts said it reflected changing expectations rather than weakening fundamentals. Laura Martin, senior internet and media analyst at Needham & Co., said SK Hynix had become a victim of expectations that had 'priced in perfection', describing Monday's decline as 'a valuation reset, not a fundamental collapse'.
Martin said investors were increasingly examining when billions of dollars being spent by Microsoft, Alphabet, Amazon and Meta on AI infrastructure would begin generating meaningful returns.
She also said that high-bandwidth memory remains supported by multi-year supply agreements that provide greater revenue stability than traditional memory products, while tighter HBM production has helped support conventional DRAM pricing.
'The correction is about valuation, not demand,' Martin wrote, adding that AI demand and the outlook for high-end memory 'remain intact' even as markets move from story-driven investing toward company fundamentals.
Why SK Hynix Remains Central To The AI Trade #
Despite Monday's record fall, SK Hynix remains one of the most closely watched companies in the AI supply chain.
The company has become the dominant supplier of high-bandwidth memory used in Nvidia's latest AI processors, placing it at the centre of the data centre spending cycle that has reshaped global semiconductor markets over the past two years.
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