SK Hynix 1,000% Annual Gain Not Enough? Top Wall Street Funds Increase Stakes, Will HBM Chip Supply Shortage Escalate Further?

TradingKey - Janus Henderson’s $8.3 billion Global Technology Leaders Fund plans to add South Korean memory chip giant SK Hynix to its holdings; the company’s stock price has risen more than 1,000% over the past year. The fund has outperformed 96% of its peers this year, with a cumulative three-year return of 36%, and currently holds leading storage industry stocks such as Micron Technology ( MU ), SanDisk ( SNDK ), and other leading storage industry players.

Co-portfolio manager Richard Clode stated that SK Hynix's global dominance in high-bandwidth memory (HBM) chips will drive even more explosive earnings growth next year. As 2026 approaches its end, previously signed long-term supply contracts will enter a repricing window; given the current tight supply, contract prices are highly likely to be adjusted upward.

“The general market expectation is that this year’s chip shortage will further intensify next year, which is why downstream customers are willing to accept stringent terms and sign long-term supply deals,” Clode pointed out. In a climate of severe supply-demand imbalance, it is safer to invest in the sector's core companies rather than agonizing over individual winners.

He also mentioned that compared to the more diversified Samsung, he prefers memory-focused manufacturers like SK Hynix and Micron, because Samsung’s consumer electronics business is facing rising cost pressures, which have weighed on its overall profitability to some extent.

To date, the market capitalizations of the three storage giants—SK Hynix, Samsung, and Micron—have all surpassed the $1 trillion mark, making them core beneficiaries of the AI infrastructure construction wave.

The HBM Leader’s "Supercycle" Dividend

Driven by the explosion in demand for AI chips, the global memory chip industry is undergoing an unprecedented super cycle, and SK Hynix is undoubtedly the most prominent beneficiary of this wave.

As the absolute leader in the global HBM chip sector, SK Hynix accounted for 57% of global HBM revenue in the fourth quarter of 2025, with its shipment market share reaching as high as 62%, far exceeding Samsung's 22% and Micron's 21%. The pricing power derived from this market position has allowed SK Hynix to achieve profit margins well above the industry average amid supply-demand imbalances. In the first quarter of 2026, SK Hynix's operating margin soared to a record high of 72%, even surpassing that of AI chip giant NVIDIA.

More notably, SK Hynix's HBM capacity for 2026 has already been fully snapped up by core customers such as Microsoft, Google, and NVIDIA, with some customers even paying full deposits in advance to secure capacity. As 2026 draws to a close, these multi-year supply contracts will enter their repricing windows starting next year.

In the current seller's market where supply remains unavailable even to those with capital, SK Hynix is expected to enjoy 'explosive premiums' resulting from the supply-demand mismatch, directly boosting its gross margin and net profit performance.

Even after a more than tenfold increase over the past year, SK Hynix's valuation remains attractive. Its forward P/E ratio is currently only about 7x, far below the Philadelphia Semiconductor Index's 27x and Micron's 10x. This valuation advantage, combined with the continued explosion in AI computing demand, has caught the attention of top-tier Wall Street funds.

As AI technology evolves from large model training to agentic AI inference, the demand for High Bandwidth Memory will continue to climb. SK Hynix has already begun preparations for mass production of HBM4 products and plans to invest $12.9 billion in a chip packaging facility in Cheongju, further solidifying its leadership in the HBM sector.

Industry analysts predict that the memory chip super cycle will last until at least 2027, and SK Hynix, with its technological advantages and capacity layout, is poised to occupy an even more central position in the upcoming wave of AI infrastructure.

AI Reshapes Memory Cycle, South Korean Chip Exports Surge

This AI-driven surge in memory chip prices is fundamentally rewriting the industry's traditional cyclical logic. Historically, the memory sector has often failed to command high valuations in capital markets due to its extreme cyclicality, characterized by the 'one year of profit, two years of loss' pattern.

However, bulls argue that advanced memory chips, led by HBM, are transforming the cyclical nature of the memory industry, as the proliferation of long-term supply contracts will effectively smooth price volatility and create a more favorable supply-demand landscape.

At the same time, the global AI-driven surge in chip demand is propelling South Korean exports to historic highs. Latest data from the South Korean Ministry of Trade shows that May exports surged 53.2% year-on-year to $87.5 billion, marking the fastest growth since 1984 and setting a new record for total monthly exports.

Explosive growth in chip exports has become the core engine of this trend. In May, South Korean exports of chips and related products reached $37.16 billion—nearly tripling year-on-year and surpassing the $37 billion threshold for the first time. This also marks the third consecutive month that South Korean chip exports have sustained levels above $30 billion.