SK Hynix shares (KRX: 000660) are under pressure today following a downgrade by Goldman Sachs from “Buy” to “Neutral.” The investment bank's decision, coupled with a price target of KRW 310,000, triggered a significant sell-off, sending SK Hynix shares tumbling 8.95% to KRW 269,500 in today's trading session at time of writing.
This downside move coincides with a potential rejection, or some profit taking at the psychologically important 300,000 level after a bullish run.
Goldman Sachs' rationale centers on the expectation that HBM pricing, a key revenue stream for SK Hynix, could face its first decline in 2026. This potential downturn is attributed to increasing competition as rivals, most notably Samsung Electronics, ramp up their HBM production capabilities. The firm believes that intensified competition could shift pricing power towards major customers, potentially leading to a double-digit percentage decrease in HBM prices. Given SK Hynix's heavy reliance on HBM sales, a contraction in HBM margins poses a considerable downside risk to the company's future financial performance.
Since the start of the year, the stock has increased by 57%, reflecting strong underlying demand for memory chips, particularly in the AI and data center markets. On July 11, SK Hynix reached an all-time high of KRW 306,500, highlighting the stock's potential when market conditions are favorable. The company's market capitalization currently stands at KRW 196trillion, a testament to its significant presence in the global semiconductor industry.
The market's reaction to the downgrade was swift, with SK Hynix's share price experiencing one of its most significant single-day declines in recent months. Conversely, shares of Samsung Electronics, a key competitor in the memory chip market, rose by approximately 2.3%.
This divergence in stock performance underscores the market's sensitivity to competitive dynamics and analyst assessments. It suggests that investors are re-evaluating the competitive landscape and potential winners and losers in the evolving HBM market.
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