Key Nvidia Supplier SK Hynix To Get Further Boost From AI Demand Even After 90% Stock Surge, Goldman Sachs And Citi Predict

Shares of South Korean chip supplier, SK Hynix Inc., have soared over 90% in the past year, and Wall Street analysts predict further growth.

What Happened: In the past month, 19 analysts have revised their forecasts upwards for SK Hynix, a major supplier of high-bandwidth memory chips to Nvidia Corp. (NASDAQ:NVDA). The revisions are driven by the high potential for AI and the anticipation of a positive surprise in this month’s earnings, Bloomberg reported on Friday.

Goldman Sachs Group Inc. (NYSE:GS) increased its stock-price target to 290,000 won ($210) on Tuesday, indicating a potential gain of 25% from that day's close. Citigroup Inc. (NYSE:C) last week raised its prediction to 350,000 won, more than 50% higher than the current share price.

See Also: China Files 6X More Generative AI Patents Than US Despite Nvidia Chip Export Ban: UN Report

SK Hynix is projected to report a second-quarter operating profit of 5 trillion won, the highest in six years, when it announces earnings on July 26. This would extend its turnaround from last year's losses, aided by a recovery in memory-chip prices and demand for high-end devices for AI applications.

However, some investors are wary as SK Hynix is now trading at 2.9 times book value, its highest since at least 2011.

Why It Matters: The projections come on the heels of SK Hynix’s parent company, SK Group, recently pledging to invest 80 trillion won ($56 billion) by 2026 in AI and semiconductors, primarily in high-bandwidth memory (HBM) chips, data centers, and personalized AI assistant services. This move is expected to strengthen its supply chains for emerging technology and bolster its position as a leading supplier to Nvidia.

Earlier this year, SK Hynix reported its first profitable quarter in five, attributing the turnaround to soaring demand for AI chips. The ongoing AI boom has put SK Hynix and Samsung in the spotlight as leading suppliers of AI graphics processing units and memory chips.

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Image via SK Hynix

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari