SK hynix’s operating profit surged 557% but still fell short of investors’ high expectations
SK Hynix's second-quarter operating profit increased 557%, but still fell short of expectations, further exacerbating market concerns that the artificial intelligence craze that has driven the boom in the semiconductor industry may be cooling down. As an important supplier to Nvidia, SK Hynix reported an operating profit of 60.5 trillion won (approximately US$42 billion) in the June quarter, which was lower than the average analyst forecast of 64.2 trillion won. Revenue was 79.3 trillion won, while the market average estimate was 83.9 trillion won. SK Hynix said it has signed multi-year contracts with about 10 customers. Thanks to one-time investment gains, the company's net profit soared 1,242%, an increase that exceeded market expectations. SK Hynix had previously surpassed Samsung Electronics and occupied a leading position in the hot artificial intelligence memory market. The company has lost more than $500 billion in market value since June as markets increasingly question whether the spending can support its lofty valuation. Rising debt levels at technology companies are also worrying investors. Leveraged products linked to the stocks of companies such as SK Hynix further amplified fluctuations in the Korean stock market. In about a month, the company's market value evaporated by approximately 45%. Josh Gilbert, chief market analyst for Asia Pacific and the Middle East at eToro, said, "When a company becomes a major supplier of high-bandwidth memory for Nvidia chips, the boom in artificial intelligence will directly affect its profits." He said, "This means that the market is unlikely to focus only on revenue data. The more important question is whether margins and performance guidance can support its recent stock price performance."