Memory-chip maker triples revenue and says demand to outstrip supply for at least three more years

By Jules Rimmer

SK Hynix first-quarter results beat records for revenues, net income and margins

SK Hynix stock has already delivered an 88% return in 2026 so beating lofty expectaions is becoming more challenging

Having rallied 88% so far in 2026, even a record-breaking set of first-quarter numbers from SK Hynix struggled to impress traders.

Growth, margins, demand and investment all signal operational and earnings momentum, while questions still persist as to whether the boom-and-bust cyclicality has been eradicated for good or simply lies dormant.

South Korea's second-largest semiconductor manufacturer (KR:000660) closed pretty much flat in Seoul, hovering around its all-time high, but underperforming the broader KOSPI KR:180721 benchmark that also registered its best-ever close at 6475, up 0.9% on the day. The Korean index, the world's best performing this year, has now rallied by a third since the end of March.

SK Hynix announced revenues for the first three months of 2026, up 198% year-over-year at 52.58 trillion Korean won ($35.5 billion), easily surpassing the 50.6 trillion won consensus according to FactSet. Net income boomed 398% to 40.34 trillion won, again comfortably exceeding analyst expectations. Operating margins at 72% were also the best SK Hynix has ever achieved and indicate the company is operating in a highly favorable environment.

SK Hynix manufactures memory chips used in AI data centers, smartphones and laptop devices, and it's the market leader in HBM (or high bandwidth) memory chips. These HBM chips are expected to be those most preferred by Vera Rubin, Nvidia's (NVDA) next-generation AI computing platform. It lags its main competitor, and Korea's largest stock by market capitalization, Samsung Electronics (KR:005930), in the DRAM (dynamic random access memory) sector.

Micron Technology (MU), a U.S. rival, fell 2% in early trade.

The unprecedented profitability reflects surging demand for memory chips and the industry bonanza that stems from a global AI build out that shows no sign at all of slowing down.

The earnings statement issued Thursday noted "some signs of softening in demand due to cost pressures from higher memory prices" in the PC and smartphone sectors but overall demand for SK Hynix chips seems buoyant. Chief financial officer Kim Woo-hyun predicted demand is set to outstrip supply for at least three years.

Anticipating this demand, the results presentation from SK Hynix pledged "this year's capex is expected to increase significantly compared with last year." SK Hynix looks to be well-positioned for the expansion, however. It has cash of $23 billion on the balance sheet, about 5% of its market cap, and there are plans afoot to seek a U.S. listing later this year to raise funds for further investment ambitions.

Management noted that geopolitical volatility has had a negligible impact on its business thus far, and like TSMC last week, reassured investors that fears of supply constraints for materials like helium and tungsten have been successfully managed so far with diversified sources and plentiful inventories.

The numbers should encourage upgrades. Writing up the results Thursday, JPMorgan's Jay Kwon predicted "the higher bit growth guidance and favorable pricing conditions bode well for continued consensus earnings-per-share upgrades." Kwon did acknowledge, however, that expectations leading into the figures were very high and so he didn't imagine "meaningful share price moves" from this print.

Kwon maintained his overweight recommendation on the stock and his 1,550,000 target price, roughly 26% above the current level. His target price is in line with analyst consensus, as is his rating on the stock. Of the analysts contributing to FactSet, there is only one sell call while everyone else says buy.

-Jules Rimmer

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04-23-26 0935ET