The actions of SK Hynix have plummeted 15.4% this Monday on the Seoul Stock Exchange after their spectacular debut on Wall Street. However, analysts believe that this decline «it’s temporary» and that the company has been penalized by the renewed tensions between the US and Iran in the Strait of Hormuz. For this reason, they assure «any fall could be considered a purchase opportunity«This is stated by Kathleen Brooks, research director at XTB, who focuses on the two reasons that explain why geopolitical risks affect semiconductors and technology more than other market sectors. Firstly, she says that «semiconductor trading important for retail investorsespecially in Asia, who also have access to leveraged ETFs. Therefore, when the external environment changes, some of these retail investors may become spooked. If they have leveraged positions, this can magnify the decline.» The other factor is that «when geopolitical tensions increasecan generate risk aversion and increase demand for physical assets, including cash. This leads to a reduction in some of the most profitable operations, which until now have been South Korean stocks and global semiconductor stocks.» In this sense, it should be noted that the south korean market It is now considered a key indicator of sentiment towards the semiconductor sector, so its decline may have global repercussions. «After a spectacular debut in the US last Friday, SK Hynix has come back to Earth with a bang, as investors took profits on its Asia-listed shares. While this suggests that some traders believe the memory chip rally may have peaked, there are other indications that the AI sector remains strong. TSMC’s revenue in the second quarter exceeded expectations, with an increase of 36% to reach a new record, although investors were cautious while waiting for the complete quarterly figures,» says Dan Coatsworth, head of markets at AJ Bell. However, for Bankinter strategists, «beyond the volatility that we may experience in the short term, we consider that listing multiples are well below the sector average and this should tend to be corrected progressively.» What’s more, for Ipek Ozkardeskaya, senior analyst at Swissquote, SK Hynix remains «cheaper» than some of its American competitors. «Its price-earnings ratio (PER) is around 18, compared to Micron’s, which is currently around 22.» And for Brooks «there is a huge structural demand for chips and memory«The reason this stock, along with those of other memory chip makers, has seen parabolic growth is that the AI demand has generated the perception that a sector historically characterized by boom and bust cycles could remain permanently in the boom phase. SK Hynix plans to double its production capacity in the next five years to meet demand,» adds Ozkardeskaya. What’s more, for Stephen Innes, managing partner of SPI Asset Management, SK Hynix has become one of the clear financial winners from global AI development. «Its mastery of high-bandwidth memory, specialized chips combined with Nvidia processors, has transformed the company into the most valuable piece of South Korea’s technology supply chain and one of the most important pressure points in the entire AI investment cycle.» However, as this expert points out, the problem with becoming the market’s goose that lays the golden eggs is that, sooner or later, everyone wants an egg. «The South Korean government sees SK Hynix as a tool to reactivate investmentrebuild industrial confidence and expand semiconductor development beyond the established manufacturing belt south of Seoul. Washington seeks to increase production capacity in the United States. Investors want higher profits and return on capitalwhile households increasingly perceive stocks as an instrument of national wealth.» SK Hynix is committed to double your wafer production capacity within five years and is considering investments that far exceed the $35 billion it has already invested in the United States. “SK Hynix has become a money-making machine thanks to AI. The difficult part is ensuring that the next wave of spending generates more fruit rather than too many branches,” concludes Innes.
