Key facts
- SK Hynix ADRs rose 5% following the initiation of coverage by six brokerages with bullish ratings.
- The positive reception contrasts with SK Hynix's recent earnings report, which missed analysts' forecasts.
- The company's ADRs are trading below their initial listing price due to a broader pullback in semiconductor stocks.
- SK Hynix is a key beneficiary of increased demand for AI-focused high-bandwidth memory (HBM) chips.
SK Hynix American Depositary Receipts (ADRs) rose 5% after six brokerages initiated coverage with bullish ratings, citing the South Korean chipmaker's dominance in the artificial intelligence memory market and access to a broader global investor base. The ADRs, which trade on Tuesday, were up at $150.08, though still 16% below their July 10 listing price due to a recent pullback in semiconductor stocks. The company priced its ADRs at $149, raising approximately $26.5 billion, supported by strong investor interest in AI-focused high-bandwidth memory (HBM) chips. Massive AI infrastructure spending has fueled demand for HBM chips, benefiting memory manufacturers. Brokerages including BofA Global Research initiated coverage with "buy"-equivalent ratings, with Rosenblatt Securities setting the highest price target at $320. Analysts at William Blair believe the U.S. listing offers an opportunity for SK Hynix shares to re-rate closer to U.S.-based rivals like Micron, driven by long-term visibility and strong ties to AI and data center markets. However, this positive reception contrasts with SK Hynix's latest earnings report, which showed a record quarterly profit but missed analysts' forecasts due to delays in advanced memory product shipments, raising concerns about the pace of AI-related spending. BofA noted that SK Hynix remains undervalued, citing strong orders from U.S. technology companies and expectations for "super-cycle" earnings as AI infrastructure spending increases. Separately, SK Hynix and one of its unions are in their fifth round of talks over bonus pay, with disagreements on profit sharing and stock-based compensation. Management proposed paying over half of bonuses in shares with sale restrictions and adjusting payments during loss-making periods, which the union opposes, warning of potential action if a revised proposal is not presented.