A rival joins Micron in the $1 trillion club as one bank argues AI is actually underhyped

By Steve Goldstein

SK Hynix is now a $1 trillion company.

The frenzy in memory-chip stocks continued on Wednesday as South Korea's SK Hynix took less than 24 hours to join American peer Micron Technology in the $1 trillion valuation club.

The 9.3% gain by Hynix (KR:000660), and the 2.7% rise for Samsung Electronics (KR:005930), sent the Kospi stock market index KR:180721 up 2.3% and its year-to-date gain to a staggering 95%.

The rally in memory looked to extend in the U.S., with Micron shares (MU) gaining another 5% in early premarket trade, after its 19% rally on Tuesday.

The question is simply how long does this meteoric run extend. Strategists at HSBC's private bank, in a mid-year outlook piece released Wednesday, said if anything the market still is undervaluing these stocks.

"While some commentators wonder whether AI is overhyped, we think it is probably underhyped," say strategists led by Willem Sels, global chief investment officer. "Earnings in the AI space have seen big positive surprises and shown that monetization is not a major concern. And following the exaggerated sell-off in software, tech price/earnings multiples are near the lowest premium compared to other sectors in several years."

The wildly popular Roundhill Memory ETF DRAM is trading at just 8.2 times 2026 earnings, according to FactSet data. The iShares Extended Tech-Software ETF IGV trades at 27.7 times 2026 earnings, a considerable cut from the 41 times earnings from just two years ago.

VanEck CEO Jan Van Eck argues the memory-chip stocks don't have competitive moats, and notes their profit explosion is driven by temporary pricing power over sales volumes.

"That means that other companies that use that memory are going to be looking to economize," he said on the Master Investor Podcast with Wilfred Frost. "It feels bubblish," he said, adding that the firm was reducing its exposure to the memory space for actively managed funds.

-Steve Goldstein

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05-27-26 0546ET