Every rally eventually runs into a wall, and South Korea's artificial intelligence (AI) stocks just found theirs. The Kospi Composite Index ($KSIC) has tumbled more than 40% from its June peak, and the primary trigger came from SK hynix (SKHY), the very company that helped fuel the rally in the first place. The tech giant delivered solid Q2 FY2026 numbers, yet it couldn't clear Wall Street's sky-high bar.
The Nvidia Corporation (NVDA) supplier posted a record quarterly operating profit that shot up more than sixfold. This is a number that most companies would frame and hang on the wall. But shipment delays on several advanced products slowed pricing gains for its flagship DRAM chips, and investors punished the stock anyway, knocking it down 8.98% on Wednesday, July 29.
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The earnings miss told only part of the story. Several other factors also weighed on the stock. So let's take a closer look at the factors that triggered the sell-off and what investors should watch next.
About SK hynix Stock
Headquartered in Icheon-si, South Korea, SK hynix has built its reputation as one of the world's leading semiconductor companies. The company develops, manufactures, and sells memory chips along with a broad portfolio of semiconductor products that power everything from consumer electronics to advanced AI systems.
The company currently carries a market cap of $903.64 billion. Its core lineup includes DRAM, NAND flash memory, SSDs, and multi-chip packages (MCPs), and it also runs a foundry business that manufactures non-memory semiconductors, spreading its bets across multiple corners of the chip world.
On the price-performance front, investors have not shown much mercy since the latest earnings release. Shares have dropped 14.73% over the past five trading days as the market digested the quarterly results.
www.barchart.com SKHY stock is currently trading at 2.85 times sales, a multiple that sits at a discount to the industry average. For investors willing to look past the noise, the discount could double as an attractive entry point.
SK hynix Misses on Q2 Earnings
SK hynix released its Q2 FY2026 results on July 29 with numbers that looked impressive on paper but still fell short of Wall Street's lofty expectations. Quarterly revenue jumped 256.8% from a year earlier to KRW 79.3 trillion ($54.7 billion). However, the figure came in below the Street's estimate of KRW 84 trillion ($57.95 billion).
Relentless spending on AI infrastructure kept demand strong throughout the quarter. High-performance products built for AI servers commanded better pricing, helping SK hynix top the revenue record it had set just one quarter earlier. First-half revenue also crossed the KRW 100 trillion ($68.98 billion) mark for the first time in the company's history.
The company generated an operating profit of KRW 60.5 trillion ($41.8 billion) and posted an operating margin of 76%. Operating profit was up 557.2% year-over-year (YOY), although it missed analysts' forecast of KRW 64 trillion ($44.15 billion).
Also, the quarter strengthened SK hynix's financial position. Cash and cash equivalents climbed to KRW 88 trillion ($60.71 billion), reflecting an increase of KRW 33.6 trillion ($23.18 billion) from the previous quarter.
Moreover, management expects this year's capital spending budget to reach the upper end of the KRW 40 trillion ($27.59 billion) range, signaling that SK hynix remains committed to expanding capacity to meet future demand. In addition, the company has signed about 10 long-term supply agreements aimed at reducing the impact of the semiconductor industry's notoriously volatile demand cycles.
Yet, several analysts cautioned that those agreements could limit upside if memory prices continue climbing because fixed supply contracts leave less room to benefit from stronger pricing. Investors also wanted more clarity on how management plans to return a larger share of the AI boom's profits to shareholders, but the company stopped short of outlining a detailed capital return strategy.
Wall Street expects the road to stay a little bumpy before conditions improve. Analysts forecast Q3 FY2026 EPS to decline 99.4% YOY to $5.87. Full-year FY2026 estimates now call for an EPS of $21.26, plunging 97.9% from the prior year. The outlook brightens in FY2027, though, with EPS projected to reach $30.72, marking growth of 44.5%.
What Do Analysts Expect for SK hynix Stock?
The recent sell-off has done little to shake Wall Street's confidence. SK hynix still holds an overall “Strong Buy” rating. Among the four analysts covering the stock, three recommend “Strong Buy,” while one advises investors to “Hold.”
Price targets suggest analysts believe the recent pullback has created room for meaningful upside. The average target price stands at $277.50, implying potential gains of 88.6% from current levels. Meanwhile, the Street-High target of $330 suggests a gain of 124.2% from current levels.
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www.barchart.com On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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