Memory winter looms again? Debate stirs over SK hynix's stock price drop

Nvidia CEO Jensen Huang signs a board equipped with SK hynix's high-bandwidth memory chips during COMPUTEX 2025 in Taiwan, May 20. Yonhap

Debate is stirring over the trajectory of artificial intelligence (AI) memory giant SK hynix’s stock price, after a recent Goldman Sachs report questioning its long-term valuation drove the stock down 8.95 percent in a single day on Thursday.

SK hynix remained flat on Friday, failing to recover from its steep drop to 269,500 won on Thursday. The decline was a blow to shareholders, as the stock had reached 300,000 won on Monday, the highest since the company became part of SK Group in 2012, on the back of optimism surrounding the global AI processor market.

Industry officials attribute Thursday’s nosedive to a July 17 Goldman Sachs report. The report downgraded its investment rating on SK hynix to neutral, citing increased pricing pressure in 2026 in the market for high-bandwidth memory (HBM), a key component for AI processors in which SK hynix is the world’s leading supplier.

SK hynix's headquarters in Icheon, Gyeonggi Province / Yonhap

Titled, “HBM speed bump in 2026,” the report estimated that “HBM pricing could decline for the first time in 2026, with increasing competition and pricing power gradually shifting to the major customers” from suppliers.

Goldman Sachs noted that the average selling price of HBM in 2026 will decline by 10 percent to $11.9 per gigabyte because the supply is expected to grow 48 percent at maximum, while demand will be growing at 38 percent. The brokerage estimated that SK hynix’s operating profit for 2026 will decline from its 2025 profit, remaining at 37 trillion won ($26.56 billion), which is 19 percent below brokerages’ consensus.

For that reason, Goldman Sachs noted Samsung Electronics’ possible supply of HBM3e to Nvidia. HBM3e is the most advanced HBM version currently in mass production, and Samsung Electronics has not been passing Nvidia’s qualification for its HBM3e.

Though Goldman Sachs noted that it remains “constructive on the long-term outlook for the HBM market,” it also presented a bear case scenario of Samsung successfully delivering 12-layer HBM3e and next-generation HBM4 to Nvidia in volume within this year. In that case, Goldman Sachs estimated that pricing could fall as much as 35 percent, significantly impacting SK hynix’s margins, because Samsung is expected to propose an attractive pricing. Reflecting those views, Samsung Electronics enjoyed a 3.09 percent rise on Thursday.

“The HBM pricing situation is still fluid and it could also depend on the changes in supply-demand (situation), including the qualification status by competitors,” the report read. “The supply-demand (situation) would not be as tight as previous years, and hence we expect rising pressure on the industry pricing.”

A sample of SK hynix's HBM 4 / Courtesy of SK hynix

Other analysts echo that the competition will likely intensify between HBM suppliers in 2026, but estimated that the upcycle on AI-related stocks will continue.

“While I agree that the valuation premium of SK hynix over Samsung Electronics is narrowing, this should come from a re-rating of Samsung Electronics rather than a devaluation of SK hynix,” LS Securities analyst Cha Yong-ho said.

Cha estimated that the average selling price of HBM will decline by 5 percent in 2026. Even if Samsung enters the HBM3e market, the HBM market is expected to face an oversupply of only 3 percent that year, he said.

“Talks are underway to resume sales of HBM-equipped AI chips to China, and the share of HBM demand from non-Nvidia sources is projected to rise 44 percent in 2026. This creates a favorable environment for HBM suppliers in terms of customer diversification … The recent correction in SK hynix’s stock is seen as an overreaction driven by excessive market concerns.”

Memory chips manufactured by SK hynix are seen on a computer circuit board in this Feb. 25, 2022 file photo. Reuters-Yonhap

Some industry officials likened Thursday’s drop to one that occurred in September 2024, when Morgan Stanley lowered its outlook on SK hynix following a series of reports warning of an upcoming "winter" for the memory market.

On Sept. 15, 2024, Morgan Stanley issued a report titled “Winter Looms” that slashed its price target for SK hynix from 260,000 won to 120,000 won, citing weakening demand for dynamic random access memory and concerns over a supply glut in HBM. Following the report, SK hynix shares closed 6.1 percent lower on Sept. 19.

After the company posted record-high earnings, however, Morgan Stanley revised parts of its earlier report multiple times, while financial authorities here launched an investigation into Morgan Stanley on allegations that its Seoul branch engaged in large-scale stock selling.

“It is not yet time to change our investment stance on SK hynix, a leader in AI chip,” said Daishin Securities analyst Ryu Hyung-keun. “When Big Tech companies increase their capital expenditures in 2026, SK hynix will be the first stock to buy. Its leadership in the AI market remains unchanged.”