SK Hynix's Nasdaq listing could not only reset AI memory trading but also accelerate it. The company is arming Wall Street to ensure it maintains its leadership position in a market that has been hot since AI began to develop.
By controlling nearly 60% of the high-bandwidth memory (HBM) market, which is critical to advanced computing, the opportunity is for investors to get a share of the leading pure gaming memory at a discount to its peers. Estimates have SK Hynix Korean listed trading at about 8x forward earnings compared to Micron's. NASDAQ: MU 13.5x, which suggests an easy double digit lookup when listing.
While the upside of SK Hynix's US listing is strong, there are a few things investors should consider, the first being volatility. The listing will involve the issuance of new shares, representing approximately 2.5% of the total number of existing shares, which will provide little headroom for price action.
The offset is likely to be major institutional support, with several high-profile firms committed to large stakes. Institutional backers include State of Awareness Partners, an investment firm founded by a former OpenAI researcher, and Coatue Management, a US-based technology company.
SK Hynix Throws Down the Gauntlet, Micron Will Respond
SK Hynix's listing in the US is expected to raise up to $28 billion in new capital. The money will be used to accelerate expansion plans and purchase new equipment, both of which are essential to meet demand and maintain product timelines.
The company is strengthening its relationship with NVIDIA NASDAQ: NVDAensures it can deliver next-generation products when needed, including HBM4. HBM4 is essential for AI, as it breaks down the memory wall by enabling increased bandwidth that uses lower power, doubles the speed of HBM3 versions, and offers about 75% more memory capacity. The impact on AI will be huge.
Catalysts for SK Hynix's share price include strong demand for HBM products, which expire in 2027, and pricing power. The price of HBM memory rose by double digits, supporting the growth of SK Hynix and Micron, and is expected to remain hot for the foreseeable future. SK Hynix removed the price caps that were in place, allowing it to shoot higher while HBM's shortfall continued.
Micron Technology Today
Micron technology
- 52 week interval
- $103.38
▼
$1,255.00
- Dividend Yield
- 0.06%
- The P/E ratio
- 21.11
- Target Value
- $1,263.76
Micron, however, is not sitting idle, allowing SK Hynix to gain share. It is expanding its production capacity and HBM4 technology, including a large HBM4 hub in Japan, and is reorienting its die-making process to be more closely aligned with NVIDIA standards so it can capture a larger share.
The likely result is that Micron breaks SK Hynix's proximity to NVIDIA while strengthening its position in the industry. Micron is also leveraging its unique position as the only domestic US memory manufacturer, expanding facilities in Idaho and New York.
Micron May Feel Headwinds-Sell-Side Data Says Buy Dip
While the outlook for Micron is equally bleak, there is potential for share price action to slow SK Hynix, at least in the mid-term. The risk is that investors will take profits and reduce their holdings of MU to shift money to SK Hynix. In this scenario, the best case scenario is that the MU stock price moves sideways within a range close to the current high, while the worst case scenario is that it faces a stronger correction than we already have. Down more than 20% from its all-time high since early July, Micron's share price could drop another 30% before finding strong support.
The caveat is that sales interest, as reflected in analysts and institutional data, remains very strong for Micron, with three times the wind. MarketBeat data reveals 38 analysts covering the name, a 92% Buy-side bias on the buy deal, and a 35% potential upside against pre-July support targets, with increased coverage, strengthening sentiment, and higher-targeted prices in the near, medium, and long term. It is not the statistics of the important consensus but the trends, which lead to a higher range and suggest that it is more than 100% in advance.
Micron's stock price action shows market strength, with the MACD converging on bullish. MACD, or moving average convergence / divergence, measures market strength and momentum and, in this case, indicates a strong, strengthening market that is more likely to retest its recent highs and move up rather than continue down. The only question is time, and that could be at the end of the year. Upcoming catalysts include Micron's Q4 earnings release in September, as well as reports from NVIDIA and Advanced Micro Devices. NASDAQ: AMDwhich are expected to ensure that the demand for AI continues to grow.
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