SK Hynix, a crucial supplier of high-bandwidth memory chips to tech giant NVIDIA, experienced a significant stock decline on the South Korean exchange. This downturn was triggered by a downgrade from Morgan Stanley, who shifted their rating on the Korean memory chipmaker from ‘overweight’ to ‘underweight.’
In a brokerage note, Morgan Stanley lowered SK Hynix’s target price to 120,000 won, down from 260,000 won. The analysts cited their preference for Samsung, highlighting the latter’s superior quality and focus on value-oriented end markets. They also expressed concerns about the deteriorating memory market, making it difficult for SK Hynix to maintain revenue growth and profitability as the market transitions away from late-cycle conditions.
The impact of this downgrade was immediate, pushing SK Hynix stock to its lowest point since February 19. The stock experienced a dramatic drop of 10%, further impacting other semiconductor shares traded in Seoul, including Samsung Electronics, which witnessed a 3.1% decline.
This news comes after a period of optimistic outlooks from other investment firms. In July, Goldman Sachs increased SK Hynix’s stock-price target to 290,000 won, suggesting a potential gain of 25%. Citigroup also raised its prediction to 350,000 won during the same period. This recent downturn raises questions about the long-term prospects for SK Hynix, especially considering the company’s parent, SK Group, had announced an ambitious 80 trillion won ($56 billion) investment by 2026. This investment was primarily focused on artificial intelligence and semiconductors, particularly in high-bandwidth memory chips, data centers, and personalized AI assistant services. The goal was to strengthen its supply chains for emerging technology and reinforce its position as a leading supplier to NVIDIA.
The ongoing AI boom has thrust both Samsung and SK Hynix into the spotlight, with industry experts debating which company represents the better investment in this rapidly growing market. The recent downgrade from Morgan Stanley adds another layer of complexity to this analysis, raising concerns about SK Hynix’s ability to navigate the evolving memory market and capitalize on the AI-driven boom.
