The increase of more than two times during the year has raised concerns! SK Hynix was alerted by the Korea Exchange for the second time in over a month

The Zhitong Finance App learned that for the second time in about a month, a major Korean stock exchange operator issued a warning about the sharp rise in SK Hynix's stock price, which raised concerns that the stock might have become overheated. The Korea Exchange issued a one-day “investment alert” for the stock on Tuesday. This warning will not stop trading, but it does indicate that investors should exercise caution. Affected by this news, as of press time, the stock fell nearly 2% in early trading.

Such alerts are usually triggered when there is a sudden or unexplained significant change in stock trading volume or price. SK Hynix shares rose 6.1% on Monday, and the market speculates that the company is planning to issue American Depositary Receipts. In response, the company stated that “no confirmation has been made” on ADR-related matters.

As an important high-bandwidth memory (HBM) supplier to the AI chip leader Nvidia (NVDA.US), SK Hynix's stock price has more than tripled since this year. Notably, on November 3, the Korea Stock Exchange issued an “investment warning” on SK Hynix stock on the evening of November 3. The warning is valid for one day. The exchange said it was a judgment based on a sharp rise in the stock. After this warning was issued. On November 4, the company's stock fell as much as 5.3% on the Korea Stock Exchange.

This kind of warning from an exchange is rare for a large listed company, and the warning issued by the exchange is an early warning signal before a higher level alert is triggered, which will limit margin trading. According to reports, if a stock is on an investment alert and meets one of the eight criteria, for example: if it rises 100% within three trading days, the exchange will issue an investment alert; in addition, if the stock rises 40% within two trading days, trading will be suspended for one day.

Demand for AI exploded, and SK Hynix's Q3 profit reached a record high

Thanks to a boost in memory demand from the global artificial intelligence (AI) infrastructure boom, SK Hynix's third-quarter sales reached 24.5 trillion won, and operating profit reached a record 11.4 trillion won.

SK Hynix plans to invest more capital next year to increase production capacity and accelerate production growth to catch up with the unprecedented wave of large-scale investment led by industry leaders such as OpenAI and Meta (META.US). SK Hynix will begin supplying the next generation of HBM4 components to customers this quarter, and will fully launch sales operations in 2026.

SK Hynix executives said during the earnings call that HBM chips have been sold out since 2023, and supply will remain tight until 2027. The company said the memory market has entered a supercycle and is seeing structural changes in memory demand.

In the longer term, many investors and tech companies are convinced that the advent of artificial intelligence will trigger a “supercycle” in the memory market, particularly for the HBM chips needed to make artificial intelligence accelerators and services such as ChatGPT. This is certainly a major benefit for SK Hynix, a leader in the HBM industry. The analysis indicates that in 2026, SK Hynix's sales and profits are expected to increase significantly, thanks to demand for DRAM and NAND chips. The company announced in its earnings report that demand for DRAM bits (total volume) is likely to increase by more than 20% next year. More importantly, NAND sales are likely to increase significantly, as SK Hynix expects demand to grow 17%-19% by 2026. Higher demand can increase sales prices, thereby increasing SK Hynix's profits.