SK Hynix, South Korea's leading memory chipmaker, reported operating profit of 60.5 trillion won in the second quarter of 2026, falling short of analyst forecasts. On 30 June, Kiwoom Securities upgraded the stock from "Outperform" to "Buy" and set a target price of 2.2 million won.
According to Kiwoom, second-quarter revenue came in at 79.3 trillion won and operating profit at 60.5 trillion won — missing market consensus estimates (based on FnGuide data: revenue 83.7 trillion won, operating profit 64.8 trillion won) by 5% and 7% respectively. The principal cause was weaker-than-expected pricing: average selling prices for commodity DRAM and NAND flash rose by just 37% and 56% quarter-on-quarter respectively, both below market averages.
Despite the headline miss, the underlying profitability picture was striking. The operating margin improved by four percentage points to 76%, up from 72% in the first quarter. Operating profit was 61% higher than the 37.6 trillion won recorded in the first quarter, and more than six times the 9.2 trillion won posted in the second quarter of 2025. Analysts attributed the improvement to expanding sales of high-bandwidth memory (HBM) chips and server-oriented products, which lifted both average selling prices and margins simultaneously.
The outlook for the third quarter is brighter still. Kiwoom forecasts revenue of 98.9 trillion won (up 25% quarter-on-quarter) and operating profit of 78.5 trillion won (up 30%). The brokerage expects commodity DRAM and NAND prices to both rise by roughly 20%, exceeding market expectations. With global server shipments projected to grow 17% year-on-year in 2026 and 23% in 2027, there is further room for server DIMM prices to appreciate. The anticipated ramp-up of HBM4 shipments to Nvidia is expected to drive both volume growth and higher average selling prices simultaneously. By segment, third-quarter DRAM operating profit is forecast at 61 trillion won (up 31%) and NAND at 17.5 trillion won (up 26%).
For the full year 2026, Kiwoom projects revenue of 326.9 trillion won and operating profit of 246.9 trillion won, implying an operating margin of 75.5% — a sharp improvement from 48.6% in 2025 and 35.5% in 2024. At the current share price of 1.401 million won, the stock trades on a 2026 price-to-earnings ratio of just 3.8 times, well below valuations typical of previous semiconductor boom cycles. The EV/EBITDA multiple of 1.6 times has led some analysts to describe the stock as deeply undervalued in absolute terms.
Investors, however, should weigh several risks carefully. SK Hynix's share price has fallen 46.7% over the past month alone and sits roughly 52% below its peak of 2.919 million won. The sell-off reflects a combination of valuation anxiety, uncertainty over the pace of capital expenditure by North American big-technology companies on artificial intelligence infrastructure, and concern that the stock-market listing of China's CXMT could intensify supply-side competition.
The second-quarter shortfall may not be a one-off event. Delays in normalising HBM4 production and shipments have nudged near-term earnings expectations lower. Diversifying its customer base beyond Nvidia and the timing of the transition to HBM4E are likely to be the pivotal variables for medium- to long-term profitability. It is also worth noting that second-quarter net profit of 93.9 trillion won significantly exceeded operating profit of 60.5 trillion won, largely owing to foreign-exchange-related gains and other non-operating items — income streams that are unlikely to recur reliably.
Kiwoom Securities lowered its target price from its previous level whilst simultaneously recommending investors increase their exposure. Its rationale: given the scale of HBM earnings growth anticipated in 2027 and 2028, the current valuation offers sufficient margin of safety. At today's share price, the implied upside to the target is approximately 57%.