Research Report Analysis: Why SK Hynix Is Expected to Outperform in H2—Dual Drivers of Rising DRAM and NAND Prices
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Research Report Analysis: Why SK Hynix Is Expected to Outperform in H2—Dual Drivers of Rising DRAM and NAND Prices
Coupled with its U.S. ADR, set to list by the end of June, this South Korean memory giant is entering a golden period of both volume and price growth.
Navigating Web3 tides with focused insightsAuthor: Rita
TideResearch Insight
HSBC has just released its research report on SK Hynix, raising its target price from KRW 2.9 million to KRW 4.0 million—a 56.6% increase—while maintaining a “Buy” rating. The core rationale is surprisingly straightforward: DRAM and NAND prices are surging, and HBM prices are rising in tandem—sufficient to support SK Hynix’s robust growth in the second half of 2026 and throughout 2027. Coupled with its U.S.-listed ADR scheduled for launch at the end of June, this Korean memory leader has entered a golden era of both volume and price expansion.
Two Key Drivers Behind Q2’s Stronger-Than-Expected Results
Recent earnings season data has already demonstrated what “beating expectations” truly means.
SK Hynix’s Q2 revenue is expected to reach KRW 81.94 trillion, up 56% quarter-on-quarter (QoQ) and 269% year-on-year (YoY). Even more striking is operating profit, projected at KRW 66.1 trillion—up 76% QoQ and 618% YoY—an explosive growth rate.
The driver behind this is simultaneous price increases in both DRAM and NAND. Average DRAM prices rose 40% QoQ, while average NAND prices climbed 50% QoQ. These two products account for over 90% of SK Hynix’s revenue; thus, even modest price movements translate directly into outsized profit jumps. From a cost perspective, memory chip production costs are relatively fixed, meaning price increases flow straight through to margin expansion.
More importantly, product mix is also improving. SK Hynix has just completed its upgrade to 321-layer NAND—enabling greater data storage per unit of capacity. Combined with a 2% depreciation of the Korean won, NAND gross margin surged from 30% in Q4 2025 to 65% in Q2 2026—a qualitative leap. This reflects not only rising prices but also falling unit costs.
The DRAM story is similar. Though the numbers aren’t as dramatic as NAND’s, a 40% QoQ price increase implies substantial profit expansion—even without higher output volumes.
Why Prices Will Continue Rising in H2
Short-term price hikes stem from demand shocks and supply constraints—but HSBC sees additional upside drivers for H2.
HBM is pivotal. Designed specifically for AI chips, HBM carries significantly higher costs and technical complexity than standard DRAM. Over recent months, HBM lost its pricing premium versus conventional DRAM due to certain chip defect issues. However, HSBC expects memory manufacturers to adjust strategy in H2—raising prices for HBM3E 12-layer products to reestablish a premium. This pricing adjustment occurs against a backdrop of persistently tight supply and unsatisfied customer demand for high-performance memory.
Looking ahead to 2027, HBM4 will become the next growth catalyst. HSBC estimates HBM4 will command a 40–50% premium over standard memory products. This implies SK Hynix’s average selling price (ASP) could rise 35% YoY in 2027. A 35% ASP increase means profits would surge substantially—even if chip shipment volumes remain flat. Profit growth driven by product upgrades—not just output expansion—is the highest-quality growth model for the memory industry.
The Certainty of the AI Cycle
HSBC compares the current memory cycle to the “super-cycle” of 1990–1995—a compelling analogy, since PC adoption then drove semiconductor demand, whereas AI is doing so now.
Growth stems from two sources. First, the rollout of Agentic AI—a new AI application paradigm—places unprecedented compute demands on servers. General-purpose server shipments are projected to grow 20% in 2026 and 21% in 2027. More servers mean more memory demand.
Second, capital expenditures (capex) by major cloud service providers (CSPs) are surging. HSBC estimates capex by the top four CSPs will reach $643 billion in 2026—up 71% YoY. These CSPs are SK Hynix’s largest customers; their capex directly translates into sales opportunities for SK Hynix. When these tech giants deploy hundreds of billions annually to build out AI chips and related infrastructure, memory demand becomes virtually inexhaustible.
Moreover, AI’s memory requirements are diversifying. Initially, demand focused heavily on premium HBM—but as deployments mature, demand is growing for lower-cost alternatives. This broadens the total addressable market and creates more growth headroom for memory vendors.
Why There’s Still 56% Upside
HSBC raised its target price from KRW 2.9 million to KRW 4.0 million—implying 56.6% upside. This revision rests on three pillars.
First, underlying earnings growth. SK Hynix’s operating profit is forecast to quintuple in 2026—to KRW 284 trillion—and climb further to KRW 452 trillion in 2027. Earnings per share (EPS) are expected to rise from KRW 62,300 in 2025 to KRW 324,700 in 2026 and KRW 516,800 in 2027. Such rapid growth justifies elevated valuation multiples.
Second, valuation multiple expansion. SK Hynix currently trades at a price-to-book (P/B) ratio of 5.4x—reasonable for the memory sector. Yet HSBC sees room for further upside. Drawing parallels with Micron—a U.S. memory peer—HSBC notes Micron has enjoyed an average 35% valuation premium over SK Hynix over the past 13 years. Accordingly, HSBC raised SK Hynix’s target P/B ratio from 2.8x to 3.4x—a 20% increase. While this may sound conservative, the key catalyst enabling this uplift is the upcoming ADR listing.
Third, the ADR listing catalyst. SK Hynix formally filed plans on June 24 to list American Depositary Receipts (ADRs) on Nasdaq. The listing itself does not alter fundamentals—but it enables broader access for international investors. Historical precedent shows that when U.S. investors gain easier access, valuation premiums often emerge.
HSBC’s View
HSBC’s report bets on a simple narrative: memory has decisively shifted from oversupply to undersupply.
This fundamental shift stems from AI. Pre-AI, memory vendors could dampen prices via capacity expansion—keeping margins thin. But AI changed everything. AI server memory demand far exceeds any prior cycle. CSPs are ramping AI server production at breakneck speed—outpacing memory supply. In this environment, SK Hynix and peers have little incentive to slash prices; instead, prices stay elevated—or keep rising.
How long can this last? HSBC believes it will hold through at least 2027. HBM4’s 2027 launch will open new premium opportunities. What about 2028? HSBC forecasts gross margin declining from 81.3% in 2027 to 73% in 2028—indicating competitive pressure begins emerging then, potentially triggering price softening. But that lies beyond the current horizon.
Risks and Floor
HSBC also outlines downside risks: U.S. interest rate hikes could prompt CSPs to rein in capex; excessive memory capacity expansion could crush prices; and escalating Middle East geopolitical tensions could disrupt supply chains. Yet none of these dominate the near-term outlook.
SK Hynix’s story epitomizes how a memory vendor rides demand tailwinds during a super-cycle. With high AI-cycle certainty, strong pricing logic, and the ADR listing catalyst—all converging—the KRW 4.0 million target price is well grounded.
Disclaimer
This article is TideResearch’s summary and interpretation of a third-party brokerage research report. Ratings, target prices, earnings forecasts, and related judgments cited herein reflect HSBC analysts’ views and represent solely the positions of their affiliated institution—not TideResearch’s views—and do not constitute investment advice.
Please note three points when reading: First, target prices represent analysts’ 12-month forward expectations—not guarantees—and are subject to repeated revisions based on financial performance and market conditions. Second, sell-side research reports inherently carry bullish bias, and some covered companies maintain investment banking relationships with the issuing brokerages. Third, the value of a research report lies in its core logic and underlying assumptions—not in any single target price. Focus on the logic—not just the number.
Markets involve risk; decisions must be made independently. This article should not serve as the basis for buying or selling any securities.
Data source: HSBC Research, Ricky Seo & Han Kil Chang, June 25, 2026 · SEC filings
TideResearch · June 2026
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