SK hynix Stock Crashes 10% Despite 557% Q2 AI Profit

South Korean chip giant SK Hynix’s stock price crashed nearly 10% on July 29 despite the chipmaker reporting its strongest quarterly operating profit ever. The company’s profit jumped more than 557% year over year, but missed high market expectations. 

SK hynix Profit Hits Record, But Misses Estimates

According to SK hynix’s second quarter earnings report, the company posted 79.32 trillion won in revenue, up 256.8% from a year earlier. Operating profit jumped 557.3% to 60.54 trillion won, giving the company a record 76% operating margin.

However, the strong results still missed market expectations. Analysts were expecting around 83.94 trillion won in revenue and 63.99 trillion won in operating profit.

The growth was mainly supported by strong demand for DRAM, NAND and high-bandwidth memory (HBM), which remains a key part of the AI chip boom. 

Still, the gap between actual results and expectations was enough to trigger heavy selling in SK hynix stock.

The earnings chart also shows how quickly the company has grown. Revenue rose from 52.58 trillion won in Q1 to 79.32 trillion won in Q2, while operating profit increased from 37.61 trillion won to 60.54 trillion won.

Why Is SK hynix Stock Falling?

The main problem was not weak demand. It was expectations.

Investors had already priced in an extremely strong AI memory cycle. Ahead of the results, analysts expected about 64.1 trillion won in operating profit and 84.1 trillion won in revenue.

When SK hynix delivered slightly lower numbers, the market reacted quickly. The SK hynix share price fell by 9.61% to $130 after falling as much as roughly 19% during the session. 

The decline also hit South Korea’s wider market, with the KOSPI closing down 6% after falling as much as 12.6% intraday.

Jim Cramer Warns of Bigger Semiconductor Selling

American TV host Jim Cramer has warned that the recent semiconductor sell-off could be driven by powerful forced sellers, describing them as “monstrous, motivated and often margined.”

He said that the stock is not falling because its business suddenly collapsed. Instead, leveraged investors and other traders may be reducing exposure as the broader AI trade faces greater volatility.

Meanwhile, economist Norvecli also highlighted the gap between strong chip pricing and investor expectations. 

He even said it wouldn’t surprise him if SK hynix and other AI semiconductor stocks could eventually fall as much as 70% from cycle highs.

Despite all, SK hynix remains one of the biggest beneficiaries of AI demand, particularly through HBM, server DRAM and enterprise SSDs.