Nomura Securities has raised the target price for SK Hynix from 2.34 million KRW to 4 million KRW on May 17, a whopping 71% jump. The current stock price reflects a potential upside of 118%.
This isn't just a standard target price adjustment; Nomura's core logic is that Hynix is no longer a cyclical stock and should be priced according to TSMC's valuation framework, using PER instead of PBR.
What does this mean?
For the past twenty years, memory chips have been the quintessential cyclical industry—prices rise, production expands, oversupply occurs, prices crash, production cuts, and then prices rise again. Investors have traditionally valued memory stocks using price-to-book ratios because profit fluctuations were too volatile to rely on PE.
Nomura states that this era has come to an end.
Three reasons:
1. HBM long-term supply agreements lock in capacity and prices for the next 3-5 years. Hynix has already signed 100% of its HBM capacity for 2026. This is not cyclical; this is akin to military contracts.
2. Samsung semiconductor workers are on strike, reducing competitor capacity. Hynix's DRAM gross margins have soared to over 70%, and they've poached 200 engineers from Samsung.
3. AI data center capital expenditures are set to only increase over the next five years. HBM is not a consumer product; it's a foundational demand. Every time Nvidia releases a GPU, it requires accompanying HBM.
Nomura predicts that Hynix's operating profit will reach 48 trillion KRW by 2028.
On the same day, Samsung's target price was raised to 590,000 KRW, but Samsung's story is completely different—strikes, loss of market share, and technological catch-up.
The memory industry is undergoing a structural repricing. The last company to transition from cyclical to growth stock was TSMC.
Now it's Hynix's turn. The era of memory supremacy has arrived.