UBS sees upside in SK Hynix stock on high memory profitability - Yahoo! Finance Canada

UBS initiated coverage of SK Hynix with a Buy rating and set a price target of $204, arguing that the market is underpricing the company's structural improvement in memory profitability. The firm note... Read original →

UBS’ bullish stance on SK Hynix highlights a structural inflection in the semiconductor memory sector. The surge in AI-driven compute demand is reshaping DRAM and NAND markets, with projected YoY growth of 36% for DRAM and 23% for NAND by 2027. SK Hynix’s improved profitability and cash flow are not yet reflected in its current valuation, despite a 33% drop from its July peak. Technologically, AI workloads are boosting demand for high-bandwidth memory and large-capacity NAND, benefiting upstream suppliers like silicon wafer and photomask vendors. Geopolitical risks, especially amid U.S.-China tech decoupling, are intensifying supply chain fragmentation, particularly affecting SK Hynix’s reliance on Taiwan, China and South Korean suppliers. Competitors such as Micron and Samsung may accelerate capacity expansion to capture AI memory market share. Over the next 12–24 months, SK Hynix’s stock upside hinges on maintaining margins and delivering shareholder returns, though near-term pricing pressure and cyclical volatility remain key risks.