[Click eStock] "SK Hynix, AI Server Investment Boom Continues... Target Price Raised"

On the 11th, BNK Investment & Securities upgraded the target price of SK Hynix to 210,000 KRW, maintaining a buy rating, citing "industry growth centered on AI semiconductors and a leading role in the core supply chain."

Amid the ongoing AI server investment boom, preference for NVIDIA chips has increased recently due to performance degradation of AI chips from self-developed CSP companies.

Although HBM demand forecasts have been revised upward, supply shortages are expected to persist long-term due to low yields. SK Hynix's MR-MUF technology excellence has been proven, and it is analyzed that competitors' entry will be limited at least until HBM3E. From HBM4 onwards, competitors may adopt MR-MUF technology, but since SK Hynix has exclusive contracts with key material suppliers, entry is expected to remain difficult for some time.

Strong performance growth is expected to continue due to a product mix of high-capacity server DRAM and HBM. The 128GB high-capacity DRAM module product, a major factor in the sharp rise of SK Hynix's server DRAM ASP, currently commands a price three times that of general DRAM. Additionally, the bit price of the flagship product HBM3 has remained at the early last year's level. The rise in the company's DRAM ASP and profitability improvement due to product mix enhancement are expected to continue. First-quarter sales are forecasted at 12.4 trillion KRW, with operating profit at 1.74 trillion KRW. DRAM and NAND ASPs are expected to increase by 15% and 20%, respectively, compared to the previous quarter. DRAM operating margin is projected to widen the gap with competitors for the third consecutive quarter.

Minhee Lee, a researcher at BNK Investment & Securities, said, "We are raising the target price to 210,000 KRW, reflecting higher-than-expected ASP increases and recent re-rating trends," adding, "Considering the AI server investment boom and the core role of the NVIDIA-TSMC-SK Hynix supply chain, the recent stock price re-rating is justified." He also noted, "Although there is short-term pressure on stock price increases, attention should be paid to the bigger picture."