SK Hynix Just Earned a Record $63B. Its Stock Is Down by Half.

The world's biggest maker of AI memory just posted an 80% operating margin, said its chips are effectively sold out through 2029 and promised about $75 billion back to shareholders this year. Its stock still trades at about half its June peak. One of those two stories is wrong, and which one decides more than one company.

HeyTheo Research · Wednesday, October 28, 2026

Quick Read

• SK Hynix (SKHY) reported third-quarter operating profit of 83.3 trillion won, about $63 billion, up 38% from the second quarter and more than seven times a year earlier. Revenue topped 100 trillion won for the first time.

• Both numbers beat forecasts by 6% to 8%. The operating margin was 80%.

• The company says AI memory is effectively sold out through 2029, with long-term contracts covering more than half of 2027 and 2028 capacity, and supply short of demand through 2030.

• The stock closed Oct 27 about 53% below its June 22 peak. The market is betting the cycle turns. The company is betting it doesn't.

The quarter in numbers

Source: SK Hynix Q3 2026 results; Q3 2025 figures derived from reported growth rates

At about 1,325 won to the dollar, that is roughly $79 billion of revenue and $63 billion of operating profit in three months. Forecasts were 98.2 trillion won of revenue and 77 trillion of profit.

An 80% operating margin is unusual for a factory business. It means SK Hynix keeps 80 cents of every dollar of sales after running its plants. Memory has always been a commodity, sold at whatever the market will pay. This quarter it priced like software.

Why the profit keeps climbing

HBM. High-bandwidth memory is stacked DRAM that sits next to AI chips like Nvidia's and feeds them data. SK Hynix holds more than half of that market. Its newest version, HBM4, starts shipping at volume this quarter, and the company expects it to outsell the older HBM3E in the fourth quarter.

Long-term contracts. SK Hynix has signed long-term agreements with 14 major customers, typically five years long, covering more than half of its capacity for 2027 and 2028. Customers include Nvidia, Microsoft and Amazon. Counting deals under discussion, it says DRAM and HBM volumes are effectively sold out from 2026 through 2029, and that customers want about twice the HBM it can supply.

Everything else got tight too. AI servers need ordinary DRAM and flash storage as well. The squeeze spread across all memory, which is why Amazon raised its 2026 spending plan to about $220 billion, blaming memory costs. We covered that in our AWS sold-out note.

Research cue · try it in HeyTheo

Ask Theo: "What's the bull and bear case for SK Hynix if memory stays short of demand through 2030?" Then run the same question on Micron (MU), the US-listed memory maker. You see which assumptions each case leans on. Open HeyTheo

Start with: search SKHY in the app.

So why is the stock down by half?

Source: SK Hynix, Seoul Economic Daily, Aju Press

Investors price what comes next, not what just happened. Four worries have done the selling:

1. Memory has always been a cycle. Every boom in the industry's history ended with too much supply and collapsing prices. Investors who lived through those cycles sell peak profits, not buy them.

2. New competition. China's CXMT announced a denser server memory product this month, and Samsung is pushing its own HBM4. We looked at the CXMT threat in our CXMT and Micron note.

3. Who pays the buyers. SK Hynix's customers are spending more than they earn on AI. Meta just launched a $37.5 billion stock sale to keep building, covered in our Meta stock sale note. If the buyers slow down, the sold-out sign comes down too.

4. Rates. With the 10-year Treasury yield near 5%, investors pay less today for profits further out. That hits the most cyclical AI names hardest.

SK Hynix answered the first worry directly. It rejected the idea that demand has peaked, pointing to cloud revenue growing 30% to 80% at the big hyperscalers and cloud spending it expects to rise more than 60% next year. Its finance chief: "We expect an environment in which supply falls short of demand to persist through 2030."

What shareholders are getting

SK Hynix plans to return about 100 trillion won, roughly $75 billion, in 2026:

• Dividends of at least 30 trillion won. This quarter's dividend is 20,000 won a share, half of it a special payout from gains on its stake in Kioxia.

• Buybacks and cancellations of at least 60 trillion won, including a 40 trillion won buyback finished last week.

• A commitment to return at least half of free cash flow.

It also holds 98.7 trillion won of net cash, and it dropped plans to list its Solidigm storage unit in the US. That is the opposite of what Meta is doing. The chip seller is shrinking its share count while one of its biggest customers is growing its own.

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The bull case and the bear case

The bull case. This cycle is built on contracts, not spot prices. Five-year agreements with 14 customers cover most of the next two years, so the usual collapse would need customers to break deals. Net cash of nearly $75 billion and a $75 billion return plan give holders paid-up support while they wait. HBM4 keeps SK Hynix a generation ahead.

The bear case. Contracts cover a little over half of 2027 and 2028, not all of it. SK Hynix plans to raise investment significantly next year as its Yongin plant ramps, and every memory maker is doing the same. The customers funding this demand are borrowing and selling stock to do it. If AI spending slows even modestly, an 80% margin has a long way to fall.

Both cases agree on one thing: the answer comes from the buyers, not from SK Hynix.

What to watch next

• Wednesday, Oct 28, after the close: Microsoft and Alphabet report, hours after the Fed. Their 2027 spending plans are SK Hynix's revenue.

• Thursday, Oct 29: Samsung reports, with HBM4 progress the number to watch. Amazon reports after the US close.

• Q4: whether HBM4 overtakes HBM3E as promised.

• Early 2027: how much SK Hynix raises investment, and whether rivals match it.

Research cue · try it in HeyTheo

Build a memory basket: SK Hynix, Micron and the AI buyers, Nvidia, Microsoft and Alphabet. Set a trigger for any move over 5% in a day through the Oct 28-29 earnings. When a buyer cuts spending, you see the memory names react in one place. Open HeyTheo

Start with: create a basket named "Memory and buyers."

Research it yourself: rules HeyTheo tracks

• Memory basket. SK Hynix and Micron tracked side by side with their biggest customers.

• Big-move trigger. Flags any day a basket name moves more than 5%.

• Backtester. See how memory stocks traded after past quarters when margins peaked.

• Ask Theo. Try: "How did memory stocks trade in past cycles after operating margins peaked?" or "Compare SK Hynix and Micron on margin, net cash and shareholder returns."

Check the rule behind any trigger before acting on it. You trade through your own broker; HeyTheo helps you decide.

The Two Clocks

SK Hynix runs on a five-year clock: contracts signed, plants planned, supply short through 2030. The stock market runs on a six-month clock, and it remembers how every memory boom ended.

Right now the two clocks disagree by about half the share price. Which one is right depends on whether the companies buying AI chips keep finding the money to pay for them.

Run your own first pass on the memory names. Create a free HeyTheo account by Oct 31 and get a month of Pro free. No card needed. On the pricing page, tap Sign up for Free till Oct 31. See the offer

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Sources

SK Hynix, Seoul Economic Daily, Aju Press, TradingKey, Yahoo Finance, Investing.com, Korea Herald

Disclaimer

Disclaimer: HeyTheo is a research and education platform, not an investment adviser or broker-dealer. Nothing here is advice to buy, sell, or hold any security. You trade through your own broker; HeyTheo helps you decide. Backtested results are hypothetical and do not guarantee future returns. References to governments, officials, or policies are for market context only and are not political endorsements. All investing involves risk, including loss of principal. Data is as of the dates noted.