Memory Demand and Its Impact on AI Chip Market

Memory has become a significant hurdle for artificial intelligence (AI) data centers, leading to a dramatic increase in demand for memory chips in recent years.

The surge in demand is so substantial that the ongoing supply shortage is projected to persist into 2030 and beyond. Unsurprisingly, investors are flocking to memory stocks, particularly Micron Technology (NASDAQ:MU) and Sandisk, which have seen notable gains over the last year. Recently, a new player, South Korean giant SK Hynix (NASDAQ:SKHY), has entered the spotlight.

A reminder of 2009: Unusual signals are showing up again. Back in 2009, a “double down” alert emerged for Nvidia, a relatively unknown chipmaker at that time. Fast forward to today, a company much smaller than Nvidia is now signaling a similar “full conviction” alert.

This competitor to Micron could very well be the biggest beneficiary of the AI memory boom. It’s worth noting that U.S. investors can now invest easily thanks to American Depositary Receipts (ADRs). Let’s explore why investing in this stock could be a wise move.

SK Hynix Surpasses Micron

Micron has gained popularity among investors largely due to its strong revenue and profit growth, explaining the impressive 689% increase in Micron stock over the past year. Conversely, SK Hynix has experienced an impressive 606% rise on the Korean stock market within the same timeframe.

This isn’t surprising, considering SK Hynix’s position as a major player in the memory chip market. The company is seeing benefits from rapid price increases and the growing demand for dynamic random access memory (DRAM) and NAND flash chips. In the first quarter of 2026, its operating profit was five times higher than in the same quarter last year, with revenue nearly tripling. Notably, the operating margin reached a record high of 72% during this quarter.

Meanwhile, Micron reported a non-GAAP operating margin of 81.2% in its latest quarter. However, it seems SK Hynix is well-positioned to narrow this margin gap due to its substantial market share. According to research, SK Hynix held a 29% share of the DRAM market in the first quarter of 2026, outpacing Micron by 7 points. It also commanded a remarkable 58% share in high-bandwidth memory (HBM), compared to Micron’s 21%.

The rising demand for HBM is particularly noteworthy; this type of memory is crucial for efficiently transferring large data sets in AI chip clusters and data centers. Essentially, HBM ensures that AI accelerator chips don’t waste time waiting for data, which is why its price is likely to double by 2027 according to industry analysts.

SK Hynix’s Potential

Given SK Hynix’s position as a leading HBM supplier, its robust revenue and profit growth are expected to continue. Moreover, the company holds an 18% market share in NAND flash storage chips, surpassing Micron’s 13%. The anticipated increase of 234% in NAND flash prices by 2026 presents another compelling reason to consider investing in SK Hynix stock.

The CEO, Kwak No-jeong, recently mentioned that the memory shortage could worsen in 2027, with demand likely to outstrip supply beyond 2030 due to strong customer needs and capacity limitations.

All these factors imply that now might be an excellent time to buy this AI stock, especially since SK Hynix currently appears undervalued.

Analyzing SK Hynix’s Share Price

As mentioned, SK Hynix’s share price has seen significant growth over the past year, but there seems to be more potential ahead. Analysts project an impressive increase in earnings per share (EPS) of 429% to approximately KRW 319,109.97 in 2026. Current estimates place the consensus EPS at about $214.21, but since each ADR represents one-tenth of a regular share, the EPS per ADR would be approximately $21.42 based on conversions.

SK Hynix’s price-to-earnings ratio stands at 22.3, which is lower than the Nasdaq 100 average of 34.5. Assuming a more conservative 20x price-to-earnings ratio at the end of 2026, if EPS reaches $21.42, the stock price could approach $428 in the coming months.

This figure is more than double SK Hynix’s current share price, indicating an attractive investment opportunity for potential multibaggers.

Is Now the Right Time to Invest in SK Hynix?

Weighing whether to invest in SK Hynix stock? Here are a few points to consider:

While they may spotlight what they believe are the 10 best stocks to buy now, it’s essential to note that SK Hynix isn’t among them. The selections are intended for long-term growth, aiming at impressive returns in the next few years.

When looking at past performers, for instance, had an investor put $1,000 into Netflix at its recommendation in 2004, it would now be worth around $396,542! Similarly, Nvidia recommended in 2005 would have yielded $1,299,961! People pay attention to these results.

Given a history of significantly outperforming the S&P 500, joining a well-established investment community could be beneficial.