The Chip Stock Behind Nvidia's AI Servers Just Landed on the Nasdaq

When it comes to AI hardware, Nvidia has attracted considerable attention, and with good reason. Its graphics processing units (GPUs) have provided the bulk of the processing power for generative AI, a technology that has fueled tremendous tech growth.

Nonetheless, Nvidia cannot succeed by itself. Its processors depend on supporting hardware such as high-bandwidth memory (HBM). One of the few companies that makes these memory chips is South Korea-based SK Hynix (NASDAQ: SKHY), which began trading on the Nasdaq on July 10. Now that U.S. investors can invest in the chip stock more easily, they may have another opportunity to profit from the growth of the AI space.

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SK Hynix launches its stock after forming a critical AI partnership

SK Hynix just engaged in the biggest U.S. IPO ever by a foreign company. The company sold 177.9 million American depositary shares. At an IPO price of $149 per share, it raised about $26.5 billion.

That offering came just a few weeks after Nvidia and SK Hynix announced that they had entered into a multiyear technology partnership. Under the terms of the agreement, SK Hynix will diversify its supply chain to serve markets Nvidia has created. To this end, SK Hynix will develop memory for Nvidia's Vera Rubin AI platforms, its Vera CPUs, Jetson Thor robotic platforms, and RTX Spark-powered PCs.

Moreover, both companies will incorporate AI into chip design and manufacturing using Nvidia's CUDA-X libraries, its PhysicsNeMo, TCAD workflows, and in-house codes used for engineering purposes. SK Hynix will also advance Nvidia products to help fully automate fab operations.

Amid this partnership, the debut of SK Hynix on the Nasdaq is welcome news, and not just because it will give U.S. investors another choice besides Micron Technology to invest in the memory chip space.

SK Hynix controls 56% of the HBM market, according to the company, while Micron's market share is estimated at 21%. Additionally, becoming a key partner of Nvidia gives it a competitive advantage. Since SK Hynix's HBM chips will presumably work most effectively with Nvidia's products, customers are more likely to choose them over competing options.

SK Hynix by the numbers

Not surprisingly, SK Hynix's recent results might remind tech investors of Micron's. In the first quarter of 2026, the company reported $34.5 billion in revenue, a 199% increase compared to the same quarter in 2025.

Micron's second quarter of fiscal 2026 ended on Feb. 26, so it is not an exact comparison, but it reported 196% annual revenue growth for that quarter. Also, Micron's revenue growth rate was 346% in fiscal Q3 (which ended May 28), suggesting that SK Hynix could report a considerable revenue surge in its upcoming quarterly release.

Furthermore, SK Hynix's net income for Q1 was $26.5 billion. This is not only a 398% yearly increase in its profits, but it also represents a 77% net margin, a testament to how profitable SK Hynix has become.

As for how the stock might perform, it is likely too early to discern much from the stock's 13% increase on its first day of Nasdaq trading.

Developing insight from its valuation might be a little trickier. In 2025, SK Hynix earned $28.2 billion in profit. Considering its $1.19 trillion market cap, that amounts to a trailing P/E ratio of 43.

While that valuation sounds cheap relative to its growth, the memory market in which SK Hynix operates is among the most volatile parts of the semiconductor industry.

Historically, the company has experienced massive up cycles when demand outpaces supply, followed eventually by brutal down cycles when supply surpasses demand. That pattern may be why Micron trades at only 22 times trailing earnings despite similar levels of growth.

Admittedly, demand for HBM is far outstripping supply for now. That explains its massive financial growth and was likely an incentive for SK Hynix to begin trading on a U.S. exchange. Nonetheless, investors should probably keep that cyclicality in mind before making huge bets on SK Hynix stock.

Putting SK Hynix stock into perspective

HBM has become one of the more crucial hardware components of the AI boom. When considering SK Hynix's recent deal with Nvidia and its huge market share, most investors will probably perceive the stock as a welcome addition to the U.S. market.

However, Micron's history probably offers some indications about how SK Hynix's stock will perform over the longer term.

The boom in the HBM market bodes well for the stock for now, as its triple-digit percentage revenue growth indicates that the industry is nearing the peak of its cycle. Still, the memory chip industry has historically been volatile, and Micron's past performance after the boom times end could serve as a preview of what may happen to SK Hynix stock once the various manufacturers' efforts to expand production lead to a situation where supply outstrips demand.

Ultimately, investors could profit from SK Hynix stock for some time. But they should also stay on the lookout for cyclical downturns.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.