Shares of SK Hynix traded higher after several brokerages began coverage with positive ratings, highlighting the chipmaker's exposure to a surging market for AI memory. The company's U.S.-listed American Depositary Receipts (ADRs) were last quoted at $150.08 on Tuesday, up roughly 5% from prior levels, according to market data.
That gain came despite the ADRs trading about 16% below their July 10 listing price, reflecting a recent pullback across semiconductor stocks. SK Hynix had set the ADR price for its U.S. secondary listing at $149 and raised approximately $26.5 billion in the offering, supported by investor demand for memory products geared toward AI workloads.
Analysts and brokerages pointed to the company’s strength in high-bandwidth memory (HBM) chips, which have seen rising demand and pricing due to heavy spending on AI infrastructure. At least six brokerages, among them BofA Global Research, started coverage of SK Hynix with ratings equivalent to a "buy." Rosenblatt Securities assigned the highest published price target, at $320.
Bank of America acted as an underwriter on the company's U.S. secondary offering, together with Citigroup, Goldman Sachs and J.P. Morgan.
William Blair analysts said: "We believe the U.S. listing provides an opportunity for SKHY shares to re-rate closer to its U.S.-based rival (Micron), which should compound with a more structural re-rating of shares driven by longer-term visibility and strong tie-in to AI and data center end markets."
Market enthusiasm over brokerages initiating coverage contrasts with the company’s most recent earnings release, which arrived a few days after the U.S. listing. SK Hynix reported a record quarterly profit, but the results fell short of analysts’ expectations because shipments of advanced memory products were delayed. Those delays prompted questions about the timing and pace of AI-related spending.
Bank of America’s commentary included a view that SK Hynix remains undervalued, pointing to robust orders from U.S. technology firms, the company’s leadership in high-end memory chips and expectations for what BofA characterized as "super-cycle" earnings as AI infrastructure investment continues to increase.
Key points
- Six brokerages, including BofA Global Research, initiated coverage with buy-equivalent ratings, lifting SK Hynix ADRs about 5%.
- SK Hynix’s ADRs were last at $150.08 but remain roughly 16% below the July 10 listing price; the ADRs were priced at $149 in the U.S. secondary listing that raised about $26.5 billion.
- Analysts cite strong demand and rising prices for AI-focused HBM chips as a primary rationale; Rosenblatt set the highest target at $320.
Sectors affected: Semiconductors, data center infrastructure, and technology hardware markets.
Risks and uncertainties
- Shipment delays of advanced memory products contributed to SK Hynix missing analysts’ profit forecasts, signaling execution risk for product deliveries - affecting semiconductor suppliers and customers in AI deployments.
- The ADRs remain below their initial listing price amid a broader pullback in semiconductor equities, indicating potential volatility in investor sentiment toward the sector.
- Questions about the timing and pace of AI-related spending create uncertainty around future demand for high-end memory, which would influence earnings for memory manufacturers and data center equipment providers.
Bottom line: Brokerages' bullish coverage and continued demand for HBM chips are supporting SK Hynix's valuation narrative, but near-term execution issues and wider semiconductor market weakness remain active uncertainties.