Early in the morning, a bad surprise! Big straight dive! SK hynix’s performance explodes
SK hynix’s performance fell short of expectations. Affected by lower-than-expected performance, SK Hynix ADR plunged sharply in after-hours trading on U.S. stocks, once falling by more than 8%. The latest financial report shows that both revenue and operating profit in the second quarter of 2026 fell short of market expectations. In the U.S. stock market overnight, semiconductor, storage, and optical communications concept stocks also plummeted across the board, and SanDisk's stock price has "halved" since July. Affected by market concerns about the ability to monetize huge capital expenditures on AI (artificial intelligence) infrastructure, funds are accelerating their withdrawal from crowded technology, semiconductor and AI concept stocks. SK hynix big dive In the early morning of July 29th, Beijing time, SK Hynix ADR plunged sharply in after-hours trading on U.S. stocks. As of 7:00, the price dropped by 8.12%. On the news, SK Hynix released a financial report showing that operating profit in the second quarter of 2026 was 60.54 trillion won, compared with 9.2 trillion won in the same period last year, which was lower than analysts’ expectations of 64.22 trillion won; second-quarter revenue was 79 trillion won, which was also lower than analysts’ expectations of 84 trillion won. Some analysts pointed out that SK Hynix failed to meet analysts' expectations because the company's business share in the field of high-end memory chips used in AI data centers is higher than that of its competitors, which means that it benefits less when the price of traditional memory chips rises strongly. SK Hynix said it plans to significantly expand HBM4 high-bandwidth memory production capacity supply in the second half of 2026. Long-term chip supply agreements (LTA) have been signed with 10 major industry customers; DRAM shipments are expected to increase by approximately 10% in the third quarter of 2026 compared with the second quarter; NAND flash memory shipments are expected to increase slightly in the third quarter of 2026 compared with the second quarter, with an increase of Low single digits (1%~4%); the long-term supply agreement sets up a differentiated pricing mechanism, differentiates pricing based on customer types and chip product characteristics, and stabilizes cyclical violent fluctuations in storage prices; the long-term supply agreement will significantly enhance the certainty of the company's mid- to long-term orders and demand. SK hynix estimates that capital expenditures for 2026 will be in the high range of 40 trillion won; it is reviewing new shareholder return plans to increase the scale and sustainability of dividends. SK Hynix said that as the tight supply of memory chips is eased and the coverage of AI application services continues to expand, the growth momentum of the smartphone and PC business is expected to gradually pick up. In the U.S. stock market overnight, the trends of the three major indexes were divergent. As of the close, the Dow rose 1.03%, only one step away from its historical closing high of 53,055.91 points; the S&P 500 rose 0.21%, and the Nasdaq fell 0.22%. Large technology stocks rose or fell, with Google and SpaceX rising more than 2%, Microsoft rising more than 1%, Apple rising nearly 1%, and Nvidia rising 0.25%; Amazon, Meta, and Tesla closed slightly lower. "AI trading" suffered another heavy setback, and AI hardware stocks represented by the storage and optical communications sectors continued their diving trend. Micron Technology closed sharply down 8.85%, SK Hynix fell 8.98%, SanDisk fell 14.25%, and has been "cut in half" since July; in the optical communications sector, Corning fell more than 12%, and Coherent fell more than 10%; AMD and Dell Technologies fell more than 8%, and Intel fell more than 5%. At the same time, the software sector, which had been previously crushed by AI, strengthened across the board, with Adobe closing up 4.81%, IBM up 5.21%, Salesforce up 4.55%, and Thomson Reuters up 5.66%. Seagate Technology’s performance is positive In the early morning of July 29th, Beijing time, in after-hours trading on U.S. stocks, Seagate Technology's stock price rose linearly, once soaring more than 10%. However, due to the impact of SK Hynix's financial report that was less than expected, the increase narrowed, and it is now up 2.77%. On the news, Seagate's fourth fiscal quarter report for fiscal year 2026 as of July 3 showed that revenue in the fourth fiscal quarter was US$3.63 billion, a year-on-year increase of 48%, higher than analysts' expectations of US$3.49 billion; adjusted earnings per share (EPS) increased by approximately 120% year-on-year to US$5.71, which was also higher than analysts' expectations of US$5.08; adjusted operating profit margin reached 44.6%, higher than analysts' expectations of 41.9%. Seagate Technology generated $1.3 billion in cash flow from operating activities and $1.1 billion in free cash flow in the fiscal fourth quarter.
Some analysts pointed out that the improvement in profit margins may mainly come from the following three aspects: 1. The demand for high-capacity storage is stronger. AI and cloud service customers usually purchase storage products with larger capacity and higher single disk value, which helps to increase the average selling price and profit structure. 2. Industry supply is more restrained. After experiencing the previous downturn in the storage cycle, industry manufacturers are generally more cautious about expanding production. When the relationship between supply and demand improves, price elasticity is more easily reflected in profit margins. 3. The growth in revenue scale brings operating leverage. Revenue in the fourth fiscal quarter increased by approximately 49% year-on-year. After the rapid expansion of revenue, the dilution effect of fixed costs increased, making the EPS growth rate significantly higher than the revenue growth rate. In terms of performance guidance, Seagate Technology expects revenue in the first quarter of fiscal year 2027 to be US$4 billion to US$4.2 billion, with a median of US$4.1 billion, equivalent to a year-on-year growth of 55.9%, higher than analysts' expectations of US$3.79 billion; adjusted EPS is expected to be between US$7.1 and US$7.5, significantly higher than Wall Street's US$5.85 expectations. This means that the company's order visibility is relatively high and its profitability may continue to improve. The median EPS guidance increased by approximately 180% year-on-year, approximately 25% higher than market expectations, indicating that management not only expects revenue growth, but also expects profit margins to remain at a high level. Seagate Chairman and CEO Dave Mosley said in the financial statement: "As AI drives the scale of data generation and the value of data continues to increase, we expect continued, long-term demand growth in the large-capacity storage field. With the Mozaic platform and the differentiated HAMR (heat-assisted magnetic recording) technology route, Seagate is well-prepared to cope with the increasing demand for exabyte-level storage. While helping customers achieve efficient expansion, these technologies will also support the company's continued profitable growth and create long-term value."
Some analysts pointed out that the improvement in profit margins may mainly come from the following three aspects: 1. The demand for high-capacity storage is stronger. AI and cloud service customers usually purchase storage products with larger capacity and higher single disk value, which helps to increase the average selling price and profit structure. 2. Industry supply is more restrained. After experiencing the previous downturn in the storage cycle, industry manufacturers are generally more cautious about expanding production. When the relationship between supply and demand improves, price elasticity is more easily reflected in profit margins. 3. The growth in revenue scale brings operating leverage. Revenue in the fourth fiscal quarter increased by approximately 49% year-on-year. After the rapid expansion of revenue, the dilution effect of fixed costs increased, making the EPS growth rate significantly higher than the revenue growth rate. In terms of performance guidance, Seagate Technology expects revenue in the first quarter of fiscal year 2027 to be US$4 billion to US$4.2 billion, with a median of US$4.1 billion, equivalent to a year-on-year growth of 55.9%, higher than analysts' expectations of US$3.79 billion; adjusted EPS is expected to be between US$7.1 and US$7.5, significantly higher than Wall Street's US$5.85 expectations. This means that the company's order visibility is relatively high and its profitability may continue to improve. The median EPS guidance increased by approximately 180% year-on-year, approximately 25% higher than market expectations, indicating that management not only expects revenue growth, but also expects profit margins to remain at a high level. Seagate Chairman and CEO Dave Mosley said in the financial statement: "As AI drives the scale of data generation and the value of data continues to increase, we expect continued, long-term demand growth in the large-capacity storage field. With the Mozaic platform and the differentiated HAMR (heat-assisted magnetic recording) technology route, Seagate is well-prepared to cope with the increasing demand for exabyte-level storage. While helping customers achieve efficient expansion, these technologies will also support the company's continued profitable growth and create long-term value."