SK Hynix shares soared 11% following a record earnings report. It reignited the AI buzz in the market.

Shares of South Korea's SK Hynix, the main supplier of memory chips for Nvidia's AI servers, jumped nearly 11% during trading in Seoul on Wednesday, October 28, following the release of its third-quarter results. Prior to that, the company’s stock price had more than halved from its June peak.

Following SK Hynix, shares of Samsung Electronics—its main competitor in the memory market—also rose, with gains reaching 9.5% during trading. Samsung will release its quarterly report on October 29.

The Kospi index, which is considered a barometer of trading driven by expectations of AI growth, jumped 6.6% and is on track for its strongest gain in three months, according to Bloomberg.

SK Hynix's strong financial results prompted investors to once again actively invest in AI companies: shares of technology companies rose across Asia.

SK Hynix set new records in two categories at once, the company announced. Revenue exceeded 100 trillion won for the first time in its history, and operating profit rose sevenfold to 83.3 trillion won ($62.5 billion). The company exceeded analysts’ consensus estimate for operating profit by more than 7%, Bloomberg notes.

SK Hynix also announced that it will allocate an additional 60 trillion won (about $45 billion) to dividends and share buybacks by the end of the year, on top of the 40 trillion won program announced in August. The third-quarter dividend will be 20,000 won per share, and half of that amount is a special dividend from profits generated by investments in the Japanese memory manufacturer Kioxia, according to a press release.

The chipmaker expects demand for memory to outpace supply through 2030, and long-term contracts with 14 major customers already account for more than half of its production capacity for 2027–2028. All DRAM and HBM chips—high-bandwidth memory for AI—that the company will ship by the end of 2029 have effectively already been sold out, according to The Wall Street Journal, citing Park Jun-dok, head of the DRAM marketing division.

“Investors were skeptical both about whether demand for AI would last and about what share of the windfall profits would ultimately go to shareholders. Today’s news [from SK Hynix] helps alleviate both concerns,” Bloomberg quotes Jeon In-yoon, head of Fibonacci Asset Management Global, as saying.

Peter Kim of KB Securities, as quoted by the Financial Times, believes that the quarterly report confirmed SK Hynix’s growth momentum. “However, the stock market and the AI sector are looking ahead to next year and beyond, rather than at current earnings, due to concerns about the sustainability of AI spending and tighter financing conditions,” he added.

In response to analysts’ questions about the risk of overcapacity in the event of a cyclical downturn, SK Hynix executives said the company would build new plants ahead of demand but would install equipment and ramp up production in phases, according to the FT. The company believes this will allow it to slow down the expansion if market conditions deteriorate.

Analysts’ average price target for SK Hynix shares is 3.2 million won ($2,394). This is 139% higher than the closing price on October 27 and 115% higher than today’s high. Of the 45 recommendations, 43 are buy recommendations, while the remaining two are neutral “hold” ratings.

The picture is almost the same for Samsung: 38 "bullish" ratings out of 39. The average target price for its stock is 121% higher than the most recent closing price.

Since July, SK Hynix shares have also been trading on the Nasdaq in the U.S. The company released its quarterly report after the market closed on that exchange, so U.S. investors will not be able to react to it for several hours. Meanwhile, shares of Micron, the largest memory manufacturer in the United States, rose by nearly 4% on the local over-the-counter platform Blue Ocean.

This article was AI-translated and verified by a human editor