$SKHY · Ale's World of Stocks · 2026-11-10

Today we will talk about the stock of SK Hynix, symbol SKHY, which I consider a leader in the field of ultra-fast artificial intelligence memory, which is one of the most important pillars of the artificial intelligence revolution.

This also caused shares of SK Hynix to fall by about 40% in the last month alone when all factors were combined. But in my opinion, amid all this panic, SK Hynix has not only recently performed exceptionally well, achieving what is considered a record quarter in terms of profitability, but more importantly, the stock's value has reached its lowest point, a level you might not expect.

We will now examine this clear discrepancy between current market trends and SK's actual performance, not only in relation to the current situation , but also in relation to what I expect in the future, for what I consider a company poised to achieve outstanding performance for many years, compared to what everyone expects from it.

I am a long-term investor, and after seeing its shares trading at this low price, I decided to invest in it for the first time. So, I started buying some stocks, and I'll explain why now.

Well, looking at the stock chart, we can see that it has lost more than 40% of its value since its peak, and is now well below its initial offering price in July. When this American company's shares were first offered to the public , investor demand was enormous.

In fact , this was the largest IPO of its kind among foreign IPOs in history, with the subscription rate exceeding seven times. Today, even after proving the strength of its business model , you can buy its shares at a much lower price.

In fact, SK Hynix shares are currently trading at a forward price-to-earnings ratio of less than five and an EBITDA ratio of less than three, which is a very low valuation in itself, and is also about 80% cheaper than the technology sector in general.

In other words, based on valuation alone, this stock is one of the cheapest stocks currently available for purchase in the market. There is no doubt that this is an objective fact.

Despite all the hype surrounding artificial intelligence, the many warnings about an AI bubble, and the rising prices of AI stocks, this stock is considered one of the cheapest available when considering its true value.

In fact, the price is currently so low that even the most pessimistic analysts predict a significant rise in the share price. In fact, they expect, on average, its price to more than double in just the next twelve months. This is amazing.

So, the question that comes to mind is: Does SK's performance deserve this level of disdain? Let's look at the facts. Now, stripping the company of any bias, and looking at its latest earnings report, we find that its revenue during the last quarter exceeded 100 trillion Korean won , which is equivalent to approximately 78 billion US dollars in three months.

This was the first time in the company's history that quarterly sales had exceeded 100 trillion won, registering a massive year-on-year growth of 328% . However, the share price has fallen, and its market value has become extremely low, while sales are growing by more than 300%. Okay, let's continue.

The company also exceeded expectations in both revenue and profit, with gross profit rising by 539%, raising the gross profit margin from 57% a year ago to 86% currently. Even better, its operating profit rose by 632% to exceed 83 trillion won , equivalent to approximately US$62 billion , which also raised its operating profit margin to 80%.

In other words, for every dollar of sales, 80 cents of it was net operating profit, which is more than Nvidia's operating profit margin, if you believe it. It's truly amazing.

Looking at net profit, we find that it has decreased slightly compared to the second quarter, which I have noticed some parties are trying to exploit as a weakness. However, it should be noted that this decrease is mainly due to non-operating accounting items , including currency adjustments resulting from exchange rate fluctuations, as well as adjustments to the valuation of some of its long-term investment assets .

However, these remain non-operational accounting adjustments unrelated to actual business operations.

In fact, on the operational level , the company achieved operating cash flows of nearly 55 trillion won, and its cash balance and liquid financial instruments rose to a record high of over 114 trillion won, or more than $85 billion, while its total interest-bearing debt amounted to only 15 trillion won.

This means that SK's net debt-to-equity ratio is negative 32%, which means that it has a strong financial position, a rich balance sheet, and almost zero net debt.

In other words, the company is currently experiencing a major boom, due to its dominant position in the semiconductor sector. I see SK as a leader in the memory market, specifically in the field of AI processor acceleration.

The company currently produces two main types of standard computer memory known as DRAM, which make up about 75% of its sales, and data storage chips known as NAND flash , which make up about the remaining quarter.

In short, DRAM handles short-term data processing for active tasks that require immediate processing, while flash storage units, such as solid-state drives (SSDs), act as permanent storage units for long-term file and application storage .

Of course, these units outperform traditional hard drives in terms of performance, which is crucial for artificial intelligence and its future. Therefore, this aspect becomes increasingly important over time.

Because AI data centers are currently experiencing a severe shortage of both, SK has increased its average selling prices to customers by up to 20% for DRAM and 20% for NAND memory compared to the previous quarter.

However, sales volumes of DRAM memory continued to rise despite these high prices, indicating huge demand. This is something management expects to accelerate during the next quarter as well.

But the most important thing, and what really excites me as a new investor in SK shares, is what I believe is driving this momentum, which is their more specialized type of memory , called High Bandwidth Memory (HBM).

In regular computers, the memory chips are separate from the main processor and connected by fine wires to the motherboard. But when running highly complex AI models inside advanced data centers, this short physical distance creates a bottleneck that forces the processor to remain idle while waiting for data to arrive.

Well, SK solved this traffic congestion problem by stacking ultra-fast memory chips vertically on top of each other, like a skyscraper if you like, and placing this stack directly next to an AI accelerator chip on a single base.

This physical design allows massive amounts of enterprise data to move back and forth at extremely high speeds with much less energy consumption, making it more efficient as well.

Because SK is a global leader in this field, it not only controls more than 50% of the market share, but its profitability has reached almost unprecedented levels for a hardware manufacturer.

However, believe it or not, I do n't think we'll see a significant decline in any of this anytime soon. Let's now review some of the reasons why I believe we will see strong performance for years to come.

I truly believe that SK will be the biggest beneficiary of this.

On the other hand, I also don't think that supply will exceed demand anytime soon. I think it will happen eventually, but not for years, because building HBM memory alone consumes more than three times the physical chip capacity compared to standard memory.

This means that every time a customer orders an AI chip from an HBM kit, the manufacturer has to allocate three times the cleanroom space and raw materials needed to manufacture it, which naturally limits the overall supply of chips in general.

Again, we need all of this quantity now, not just HBM, but even traditional DRAM which is still in short supply because of it.

Because of all these material obstacles, SK management explicitly stated that its production capacity of Dynamic Random Access Memory (DRAM) and High-Bandwidth Memory (HBM) had been completely sold out until 2029, with the difficult market conditions expected to continue until at least 2030.

Looking back at SK’s financials for a moment, analysts’ projections , even in the long term, indicate continued double-digit growth in both revenue and profit through 2028. While this growth is expected to slow, it doesn’t necessarily mean the company will be significantly worse off than it was before .

On the contrary, it will be stronger, richer and in a much better position.

However, the price-to-earnings ratio will be around 4? Less than 4? I mean, the price will be extremely low. I don't know. To me, this is a very low rating compared to the volume of work they have accomplished over many years.

They remain Nvidia's primary memory supplier, with a long-term $500 billion supply partnership , where they are likely to supply up to 70 % of all next-generation HBM 4 chips in Nvidia's upcoming Ver Ruben computing platform.

Building on this momentum, the administration announced that mass production of the next-generation HBM 4 chips had begun shipping ahead of schedule. They have finalized contracts with clients for 2027 at higher prices.

We are also seeing strong growth beyond dynamic random-access memory (DRAM) to include enterprise flash storage. To protect themselves from a future economic slowdown, they have already signed 14 long-term, five- year agreements with leading global cloud computing service providers , guaranteeing them more than 50% of their total production capacity through 2028, with pre-negotiated minimum prices and mandatory upfront cash deposits.

Again, anything is possible in this volatile world , especially with such a volatile economy and stock market with everything that is happening, particularly in the short term.

So, as always , never invest money you can't afford to lose, because I believe things will remain volatile. I wouldn't be surprised at all if the stock price dropped even further.

That wouldn't shock me at all . Actually, I kind of wish for that because I would like to get lower prices. But I'm just saying that I think the market will be volatile, with big swings up and down . You should be prepared for that.

As for me personally, when I put all these factors together, I believe the stock is worth the risk at this low point for my investment portfolio. It is not something I am exaggerating in any way .

In fact, this is the smallest stock I currently own out of about 50 different stocks, because I only recently started buying it. But yes, it is a stock that I like and I hope to increase my stake in it over time.