Jim Cramer Slams SK Hynix as 'Monster': Market Turns Into Margin Call and Gambling Arena

South Korean memory giant SK Hynix (SKHY-US) triggered a sharp global semiconductor stock selloff after releasing its latest quarterly earnings. CNBC's well-known host Jim Cramer took to the social platform X, calling SK Hynix a 'Monster' disrupting global markets, arguing that trading no longer reflects fundamentals such as DRAM pricing or capacity expansion, but is instead dominated by leveraged trading, margin calls, and speculative capital.

Cramer stated, 'We will eventually regret allowing this monster into the market. SK Hynix now represents not DRAM prices and new capacity, but margin calls and gambling.'

He followed up with another post, noting that recent rumors suggest some leveraged hedge funds and semiconductor-focused funds are facing massive losses. The widespread popularity of 2x leveraged single-stock ETFs may be a key reason behind the extreme volatility seen in stocks like Intel (INTC-US), SK Hynix, and hard drive-related equities.

Cramer’s comments echo recent concerns from South Korea’s financial regulators. With retail investors heavily using leveraged ETFs to bet on individual stocks, and foreign investors aggressively adjusting their tech stock positions, Korean regulators are now considering restricting retail access to single-stock leveraged ETFs to reduce market volatility and forced liquidation risks.

The spark for the market turmoil was SK Hynix’s recently released second-quarter financial results.

Despite reporting its best-ever revenue, the company’s profit slightly missed market expectations, leading to divergent interpretations among investors about the future of the AI memory industry.

SK Hynix’s Q2 revenue reached 79.32 trillion Korean won (approximately $54.53 billion), a 257% year-on-year increase, setting a new record high. Its operating margin climbed to 76%, also a historical peak.

The company’s operating profit reached 60.54 trillion won (about $41.62 billion), up 557% year-on-year, but still below the LSEG SmartEstimate analysts’ consensus of 64 trillion won (around $43.99 billion).

Although demand for AI servers and the high-bandwidth memory (HBM) market remains strong, and the company continues to expand its production capacity, concerns over intensifying competition from China’s memory industry and whether the AI investment boom is cooling have triggered massive profit-taking.

Cramer also mocked the polarized market reactions to the earnings. He said the earnings call provided ammunition for both bulls and bears: 'Demand is good, capacity expansion is good, but some say the report is amazing, others say it’s disappointing—everything is chaotic, and so is the stock price.'

He questioned further: 'We see media calling this quarter’s results astonishing, while others call it disappointing. And this is supposed to be the most important stock in the market right now?'

SK Hynix’s sharp stock decline dragged down global semiconductor stocks.

In South Korea, the KOSPI index fell 5.99% on Wednesday, plunging 33.10% in July alone, and retreating 39.66% from its 52-week high of 9,385.59 points.

SK Hynix’s Korean-listed shares closed down 9.61% on Wednesday. While still up 115.21% year-to-date, the stock has plummeted 46.69% in July and dropped 23.44% over the past five trading days.

SK Hynix’s ADR listed in the U.S. fell 8.98% on Tuesday, closing at $130.17, down 23.43% from its recent peak. It declined another 0.57% in pre-market trading on Wednesday.

The iShares Semiconductor ETF (SOXX-US), which tracks the semiconductor sector, was also affected. Despite being up 61.18% year-to-date, it has declined 16.69% over the past month, though it remains up 99.98% over the past year.

Major tech stocks also came under pressure. The Nasdaq 100 index dropped to 27,763.14 on Tuesday, down 9.75% from its previous all-time high of 30,762.20, nearing the widely recognized 10% technical correction zone. However, the Invesco QQQ Trust (QQQ-US), which tracks the index, rose 0.23% in pre-market trading on Wednesday, indicating a slight recovery in market sentiment.

Analysts point out that the recent sharp correction in global semiconductor stocks has been driven not only by earnings performance but also by market deleveraging, doubts over AI investment returns, and advancements in China’s semiconductor technology. With major tech companies’ earnings reports and the Federal Reserve’s interest rate decisions upcoming, whether AI supply chain stocks can stabilize will be the next key market focus.