AI Boom Drives Memory Super Cycle: Major Wall Street Firms Favor SK Hynix

As global artificial intelligence (AI) infrastructure continues to expand, the semiconductor memory industry is undergoing structural transformation. On Wednesday, May 5, Asian stock markets rebounded strongly after volatility, with South Korea’s KOSPI index closing up 3.76%. Notably, global memory giant SK Hynix saw its share price surge 5.77%.

This rally was primarily driven by multiple Wall Street financial institutions initiating research coverage on SK Hynix (SKHY-US) ADRs and uniformly assigning positive ratings.

According to recent market data, at least six financial institutions—including Bank of America, UBS, and JPMorgan Chase—have recently published their first analytical reports on SK Hynix, collectively expressing 'Buy' or 'Overweight' positions.

Bank of America’s report analyzed that orders for high-end memory chips from U.S. tech firms remain robust, and given SK Hynix’s leading position in this segment, coupled with the expanding scale of global AI infrastructure investment, the company’s earnings are expected to enter a 'memory supercycle.' The report also noted that the current stock price appears significantly undervalued.

UBS analyst Nicolas Gaudois extended his forecast through 2028. Gaudois believes current valuations have not fully reflected the industry’s structural profit upside, substantial improvement in free cash flow, and the company’s ongoing shareholder return initiatives.

JPMorgan shares an optimistic outlook on the memory sector, pointing out that revenue momentum from cloud service providers (CSPs) and AI model labs continues to strengthen, indicating improving return on investment (ROI) for AI-related capital expenditures.

Although factoring in opportunity cost, the firm revised its target price-to-earnings (P/E) multiple from 8x to 7x and lowered its price target from 3 million to 2.75 million Korean won. Nevertheless, it emphasized that risk-reward remains favorable over a 12-month horizon and views the recent stock correction as an opportunity to add positions ('overweight').

On the technology front, SK Hynix is consolidating its technological leadership by setting industry standards. The company jointly announced the first set of specifications for 'High-Bandwidth Flash (HBF)' with flash memory leader SanDisk (SNDK-US). This product supports up to 16-layer stacking, enabling single-chip storage capacity of up to 512GB.

The HBF Specification Standardization Alliance was co-led by both parties in February this year and finalized after six months of R&D. To promote widespread adoption, the specification has been publicly released through OCP (Open Compute Project), the world’s largest open data center technology collaboration organization, allowing free use by the entire industry.

Market analysts indicate that the establishment of the HBF standard will not only enhance data center computing efficiency but also further strengthen SK Hynix’s competitive moat in the high-end storage arena.