The case for SK Hynix (NASDAQ: SKHY) rests on a number its better-known rivals cannot match: 56.4% of the high-bandwidth memory market in Q1 2026, according to IDC. The stock sold off after its most recent earnings. Those two facts sit in uncomfortable proximity.
The AI memory trade has been driven by surging demand for GPUs and expanding agentic AI workloads, tightening supply and lifting average selling prices. SK Hynix's second-quarter results reflected that: revenue of 79.3 trillion Korean Won, approximately $55 billion, with operating profit of 60.54 trillion Won, a 76% margin. Management said prices for both DRAM and NAND rose sharply quarter over quarter, with high-value products including HBM, AI-server DRAM, and enterprise SSDs leading the expansion.
Market position and the valuation gap
IDC's Q1 2026 data puts SK Hynix second to Samsung (OTC: SSNLF) in DRAM and NAND flash revenue market share. Micron Technology (NASDAQ: MU) held about 22% of DRAM and 14% of NAND in that period. Sandisk (NASDAQ: SNDK) captured roughly 14% of NAND. Despite that narrower slice of the market, both American names have drawn considerably more capital. As of August 6, Micron had gained roughly 715% over the prior year and about 212% year-to-date. Sandisk posted gains near 3,000% over the last twelve months and roughly 439% year-to-date in 2026. SK Hynix trades at a forward price-to-earnings multiple of 5.5. Sandisk sits at 5.9x. Micron is at 12.0x.
The counterargument
SK Hynix missed elevated consensus estimates, with the street having priced in even higher revenue and operating profit than the company delivered. The sell-off followed. Two additional concerns are in the picture: whether the memory cycle is peaking, and whether new Chinese production capacity will compress pricing. Memory cycles have turned before. When they do, margins tend to move faster than most forecasts expect.
On balance, a 76% operating margin does not fit the profile of a business running short on demand. The gap between SK Hynix's market position and its multiple reflects expectations the company couldn't clear, not fundamentals it couldn't sustain. The line to watch is whether hyperscaler AI infrastructure spending holds through the rest of 2026. At 56.4% HBM share, any sustained build-out runs through Seoul regardless of what the forward P/E does.