【US Pre-Market】SK Hynix’s $75 Billion Return Plan Boosts Memory Stocks, SKHY Rises About 8%; Fed Decision, Microsoft, Google Earnings in Focus

TradingKey - In pre-market trading on October 28 ET, futures tied to the three major U.S. stock indices were mixed. As of press time, Dow futures fell about 0.15%, S&P 500 index futures rose slightly by 0.18%, and Nasdaq 100 index futures gained about 0.46%.

Memory chip stocks strengthened, providing support for tech stocks; investors awaited the Federal Reserve's rate decision and focused on Microsoft (MSFT) and Alphabet (GOOGL)'s post-market earnings reports.

[Source: Investing.com]

In commodities, as of press time, Brent crude (UKOIL) was trading at $111/barrel; WTI crude (USOIL) was at $101.33/barrel.

Gold (XAUUSD) was trading at $4,047/ounce. Bitcoin (BTCUSD) rebounded from yesterday's low, climbing back above $81,000.

Market Moves

SK Hynix (SKHY) rose over 8% in pre-market trading after reporting record-high financial results and announcing an approximately $75 billion shareholder return plan.

Third-quarter financial results released by SK Hynix on October 28 showed that the company's revenue reached 104.62 trillion won (approximately $78.86 billion), up 327.9% year-over-year. Operating profit reached 83.33 trillion won, up 632.1% year-over-year. Both metrics set record highs.

The company stated that investments in AI infrastructure drove demand growth for HBM and server memory, predicting that tight supply-demand conditions in memory chips could persist through 2030.

In terms of shareholder returns, the company plans to return approximately 100 trillion won to shareholders in 2026 through cash dividends and share buybacks. SK Hynix also stated that long-term agreements signed with 14 major customers have covered more than half of its production capacity for 2027 and 2028, providing visibility into future demand.

Boosted by SK Hynix's financial results and buyback plan, Micron (MU) rose over 4% in pre-market trading, while Western Digital (WDC) gained over 4%.

NXP Semiconductors (NXPI) fell over 7% in pre-market trading as its fourth-quarter profit guidance missed expectations.

NXP's third-quarter revenue grew 19% year-over-year to $3.79 billion, and adjusted earnings per share reached $4.20, both topping market expectations. However, the company expects fourth-quarter revenue of $3.75 billion to $3.95 billion, with the midpoint slightly below market expectations; its adjusted operating profit guidance also fell short of analysts' expectations. The weak profit outlook offset the positivity from the better-than-expected third-quarter results, putting pressure on the stock price.

Seagate Technology (STX) fell over 3% in pre-market trading, as strong financial results failed to boost the stock.

Seagate's fiscal 2027 first-quarter revenue grew 61% year-over-year to $4.233 billion, while non-GAAP adjusted earnings per share came in at $7.68, beating market expectations of $7.45. The company expects second-quarter revenue of $4.7 billion to $4.9 billion and adjusted EPS of $9.00 to $9.40, both above market expectations.

Despite strong results and guidance, the stock still dropped, likely reflecting that prior gains had already priced in growth expectations, as well as investor concerns over hard drive industry competition, cost pressures, and the sustainability of future demand.

Market News

Fed releases interest rate decision as market focuses on inflation and future rate cut signals.

The Federal Reserve concluded its two-day policy meeting on October 28 and plans to announce its interest rate decision at 2:00 p.m. As markets expect interest rates to remain unchanged, investors are focusing more on the policy statement and the chairman's press conference for assessments of inflation, economic growth, and the future rate path.

If the Federal Reserve expresses stronger concerns over inflation, bond yields could rise, putting pressure on high-valuation tech stocks; if policy aligns with expectations, market focus may return to corporate earnings and AI investment returns.

Microsoft and Alphabet to report earnings after market close, with focus on whether AI capex can deliver returns.

Microsoft and Alphabet are expected to report quarterly results after market close on October 28. Attention will focus on Microsoft's Azure cloud growth rate, Copilot commercialization, and data center capex, while Alphabet faces tests regarding Google Cloud growth, AI product monetization, and returns on infrastructure investment.

As big tech companies continue to expand AI infrastructure investments, market expectations for performance are extending from demand growth to profitability and cash flow. The financial results and management guidance released by both companies may also affect market expectations for Nvidia (NVDA), AMD (AMD), Broadcom (AVGO), and memory chip companies.

OpenAI reportedly plans to purchase Google AI chips in a bid to reduce reliance on Nvidia.

According to a report by The Information, OpenAI plans to procure Google's in-house Tensor Processing Units (TPUs) to diversify its sources of AI computing power. The report did not disclose the procurement scale, dollar amount, or specific terms of the potential transaction. Reuters reported that Google did not immediately respond to a request for comment at the time, while OpenAI declined to comment.

OpenAI is a key customer for Nvidia's GPUs. If the procurement plan is implemented, it would help Google expand its TPU business and could intensify competition in the AI chip market. However, it is currently impossible to determine the actual impact of the plan on Nvidia's orders and market share.

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