TLDRs
- SK hynix stock plunged as investors questioned durability of AI-driven memory profits.
- Chinese memory advances and DUV progress intensified concerns over future competition.
- Record quarterly revenue and profit estimates failed to prevent a sharp selloff.
- Analysts say HBM leadership remains intact, but valuation uncertainty continues to dominate.
SK hynix shares suffered one of their sharpest declines of 2026 on Tuesday, with investors rapidly reassessing the sustainability of the company’s AI-driven earnings boom.
The selloff came despite expectations that the South Korean memory giant will report record second-quarter revenue and operating profit.
In Seoul, SK hynix stock closed at ₩1.55 million, down 14.65% for the session, while its U.S.-listed depositary shares fell nearly 9% to $130.17. The decline erased roughly ₩190 trillion in market value, a figure that dwarfs the company’s projected quarterly operating profit and highlights the scale of investor anxiety surrounding the memory sector.
The move was not simply a reaction to earnings expectations. Instead, traders appeared to focus on what comes after the current profit peak, with concerns centered on Chinese memory competition, AI infrastructure spending, and the longer-term outlook for memory pricing.
Massive Value Loss
The magnitude of the selloff was striking even by semiconductor-sector standards. Over the last five trading sessions, SK hynix shares have dropped more than 15%, although the stock remains up well over 100% for the year.
The broader chip market also weakened sharply. Samsung Electronics declined by around 13%, while Micron Technology fell nearly 9% in New York trading. The broader KOSPI index posted a steep decline as risk appetite across technology stocks deteriorated.
What made SK hynix stand out was the disconnect between its expected earnings strength and the severity of the share-price decline. Investors were not reacting to weak current results; they were questioning whether the exceptional profitability generated by AI memory demand can be maintained into 2027 and beyond.
China Sparks Fresh Fears
The immediate trigger for the latest wave of selling came from China. Shares of Chinese memory maker CXMT surged following a strong market debut, while reports of progress in domestic deep-ultraviolet lithography technology fueled speculation that China could accelerate its memory manufacturing capabilities.
Investors fear that increased Chinese production could eventually pressure DRAM pricing, particularly in the commodity segment of the market. Analysts caution, however, that the competitive picture is more nuanced than the market reaction suggests.
While CXMT is viewed as a growing challenger in conventional DRAM, it is still considered several years behind Korean manufacturers in high-bandwidth memory technology. HBM is currently the most important segment of the memory industry because it powers AI accelerators used in data centers.
SK hynix remains a key supplier of HBM products to NVIDIA, giving the company a stronger position than many commodity-memory producers.
Record Earnings Still Expected
Despite the stock collapse, consensus estimates for the second quarter remain exceptionally strong. Korean brokerage forecasts point to revenue of approximately ₩84.1 trillion and operating profit of about ₩64.1 trillion, both of which would represent new company records.
Expected operating margins are also projected to improve further, reaching roughly 75% to 77%, compared with about 72% in the previous quarter.
Analysts say the quality of revenue has improved as well. A large share of sales is now tied to global technology companies and AI data-center operators, which generally provide better pricing and margins than consumer-memory customers.
This shift toward AI infrastructure has been the central driver of SK hynix’s remarkable earnings recovery over the past year.
Valuation Debate Intensifies
The key issue for investors is no longer whether SK hynix is generating strong profits. The debate has shifted to whether those profits are cyclical, temporary, or capable of supporting the company’s current valuation.
Concerns have also emerged over the pace of AI spending. If cloud providers and data-center operators slow their investment plans, demand for advanced memory could cool more quickly than expected.
Market participants are now watching management commentary closely for clues on contract pricing, capacity expansion, capital expenditure, and margin sustainability. Samsung’s upcoming detailed quarterly results are also expected to provide an important read-through for the broader memory industry.
For now, SK hynix finds itself in an unusual position: a company expected to deliver record earnings while simultaneously facing one of the market’s most severe valuation stress tests.
The current selloff suggests that investors are demanding more than strong quarterly numbers. They want evidence that SK hynix can defend its technological lead in HBM, navigate rising Chinese competition, and preserve today’s extraordinary margins long after the latest AI enthusiasm fades.
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