Catenaa, Wednesday, July 29, 2026- US chip stocks declined on Wednesday after SK Hynix earnings failed to impress investors, on fears about overinvestment in AI capacity.
SK Hynix said it expects its capital investments to rise around 50% to at least $31 billion. It posted margins of more than 80% for the June quarter, a high watermark, because of the endemic memory shortages that have helped raise prices it charges customers like Apple and Nintendo.
The PHLX Semiconductor Index fell more than 3%, extending losses from the prior session. AI chip heavyweight Nvidia stock dropped more than 2%, while peer AMD fell roughly 5%.
SK Hynix executives brushed aside those fears on Wednesday, telling investors they’re signing long-term contracts with no end in sight to explosive demand.
They echoed SK Group Chairman Chey Tae-won’s view that demand will outpace supply until at least 2030.
It’s now preparing to deliver the next-generation of high-bandwidth memory, known as HBM4E, in bulk to top customer Nvidia in 2027. And bit growth, or unit shipments of memory capacity, should accelerate in the second half, executives said.
Barclays analysts cut their price target on US-listed stock to $300 from $330 following the results but still maintain an Overweight rating. Susquehanna analysts also cut their price target on the South Korean shares.
Investors worry that soaring chip costs may trigger a broader economic slowdown, pushing prices of electronics higher and spurring manufacturers to cut production of devices like PCs and smartphones.
Chipmakers have pushed back, saying that demand is expected to outstrip supply for the long term. They point to customers such as cloud service providers ratcheting up orders for memory, lifting both volumes and margins.
SK Hynix Chief Executive Officer Kwak Noh-Jung told Bloomberg earlier this month that the severe memory chip shortages that are roiling the computer, car and device makers would likely persist beyond 2030.
SK Hynix’s net income surged a bigger-than-expected 1,242% on one-time investment gains in the June quarter, shoring up the company’s financial strength. Operating profit rose 557%, but still fell short of elevated projections. Revenue also came below the average analyst estimate.
SK Hynix, along with Samsung Electronics and Micron Technology, dominates global memory supply. The trio has increasingly shifted production in recent years toward high-bandwidth memory used in Nvidia’s AI accelerators, tightening supplies of conventional memory.
Attention now is on SK Hynix’s pricing ability. SK Hynix won multiyear contracts with around 10 customers, it said.
And last week, parent SK Group signed a pact with Nvidia on a partnership spanning deals worth more than $500 billion. The figure includes money that Nvidia will spend buying memory chips, as well as purchases of supercomputers, Nvidia CEO Jensen Huang told Bloomberg Television.
