Bank of America Highlights Five Key Upsides for SK Hynix, Forecasts Stock to Double, HBM Dominance Secure

Bank of America has reinstated research coverage on SK Hynix, assigning a 'Buy' rating to the South Korean stock and introducing coverage on SK Hynix's ADR (SKHY-US) with a $250 target price. The bank believes continued growth in demand for high-bandwidth memory (HBM) driven by AI infrastructure expansion will propel the company into a new profitability supercycle.

Bank of America argues that SK Hynix's strategic position in the global AI infrastructure build-out is not yet fully reflected in the market and outlines five key reasons supporting its bullish outlook.

First, SK Hynix maintains a leading advantage in the HBM market. As demand for high-performance memory in AI servers increases, Bank of America forecasts that SK Hynix will sustain over 40% market share in both the HBM and enterprise SSD markets using QLC NAND through 2028.

Second, memory pricing and profitability still have room to rise. SK Hynix reported Q2 2026 revenue of 79 trillion KRW, up 51% quarter-on-quarter and 257% year-on-year, with operating margins rising to 76%. DRAM and NAND operating margins reached 81% and 65% respectively, both setting new records.

Bank of America expects DRAM average selling prices (ASP) to increase 25% quarter-on-quarter in Q3 and a further 9% in Q4, exceeding broader market expectations. This implies that even though the company's recent performance has already reached record highs, profitability in the coming quarters may continue to improve.

Third, profit scale is expected to expand further. Bank of America estimates SK Hynix's Q3 2026 operating profit could reach 81 trillion KRW, with Q4 potentially surpassing 90 trillion KRW, resulting in an annualized operating profit exceeding 300 trillion KRW by year-end. The bank expects this profit level to continue into 2028, supported by DRAM operating margins remaining above 80%.

Fourth, AI capital expenditures by major U.S. tech companies have not yet peaked. Bank of America believes hyperscale cloud providers will not only increase investment in 2027 but may also exceed $1 trillion in annual capital spending in 2028, allocating more funds to AI data centers equipped with advanced memory.

Despite market concerns over financing and debt pressures facing large tech firms, Bank of America argues it is too early to anticipate cuts in AI data center capex. As long as such investments continue, demand for HBM and enterprise storage products will remain supported.

Fifth, competitive threats and current valuation are favorable for stock performance. Even if Samsung Electronics increases its HBM investment, Bank of America estimates its global market share will remain between 30% and 40% through 2028, insufficient to challenge SK Hynix's leadership. Chinese memory makers are expected to hold less than 10% of the global serviceable market during the same period, exerting limited pricing pressure.

On valuation, SK Hynix's current stock price is approximately 4x Bank of America's estimated earnings for 2027–2028, near historical lows. Using an 8x P/E multiple, the bank calculates a 3 million KRW target price, which remains below the 9x to 11x fair range it assigns to global DRAM peers, suggesting additional upside potential if the memory cycle extends as expected.

For SK Hynix's ADR, Bank of America sets a $250 target price, approximately 20% premium over the converted Korean stock target. The bank notes this premium reflects post-listing trading dynamics and aligns with Micron's relative P/E premium over SK Hynix's Korean shares for 2027–2028 estimates.