SK Hynix shares surged 11% in Seoul on Wednesday, extending a sharp rebound from the chipmaker's worst-ever single-day decline. The recovery comes after a volatile week that saw the stock crash 15.4% on Monday, following its record-breaking Nasdaq debut.
The South Korean memory giant's American depositary receipts (ADRs) had gained 12.8% on their first trading day Friday, before profit-taking and leveraged positioning triggered a brutal reversal. Monday's rout dragged the broader Kospi index down about 9%, prompting a temporary market-wide trading halt. A tentative 3.7% recovery on Tuesday set the stage for Wednesday's stronger advance, suggesting some investors believe the sell-off was overdone.
From Record Listing to Whiplash
SK Hynix's ADRs were priced at $149, opened at $170, and closed their first Nasdaq session at $168.01. The blockbuster listing raised approximately $26.5 billion, setting a record for a US share sale by a foreign company. However, enthusiasm quickly collided with profit-taking and a wider sell-off in South Korean stocks. Leveraged funds linked to SK Hynix amplified the reversal as investors rushed to cut exposure.
The mood improved after softer US inflation data revived demand for technology shares. SK Hynix rose as much as 13% on Wednesday before trimming gains, while Samsung Electronics advanced about 6%. Hanmi Semiconductor, a supplier of chip-packaging equipment, surged roughly 25% in early trade.
The rebound also followed a strong US session for memory stocks. SK Hynix's ADRs soared almost 28% on Tuesday after Barclays initiated coverage with an Overweight rating and a $330 target. Micron and other semiconductor names also advanced, reinforcing the view that Monday's rout was driven more by positioning than by a sudden deterioration in AI demand.
Analysts Say Selling Was Overdone
Phillip Wool, chief research officer at Rayliant Global Advisors, told CNBC that the weakness in Asian AI hardware stocks was "mostly risk management." Investors had built unusually large positions in South Korean and Taiwanese chipmakers following their exceptional rallies, Wool said. Reducing those holdings represented prudent portfolio rebalancing rather than a loss of enthusiasm for AI infrastructure.
Daniel Yoo, global strategist at Yuanta Securities, told CNBC's Squawk Box Asia that investors were still trying to determine the appropriate valuation after the ADR issuance created a new US benchmark for SK Hynix. The additional supply and the unusually large premium between the ADRs and Korean shares have contributed to short-term volatility.
UBS has retained a Buy rating and raised its Korean-share price target to 3.2 million won. The bank expects operating profit of 327 trillion won in 2026, roughly 27% above market consensus, supported by HBM4 shipments, longer-term customer agreements, and potential shareholder returns following the US listing.
Not Everyone Is Convinced the Rally Has Legs
The recovery does not erase the risks created by SK Hynix's remarkable run. Even after the correction, the Korean shares remain several times higher than they were a year ago, an unusual performance for an industry historically defined by sharp cycles of shortage and oversupply.
Investment writer Edward Sheldon argued in a bear-case analysis published by Themes ETFs that investors may be underestimating memory cyclicality, rising competition, and SK Hynix's dependence on a small number of major AI customers. Morningstar is similarly cautious. Analyst Lorraine Tan said the current memory upcycle was proving stronger than expected, but maintained that conditions would eventually normalize, limiting the potential upside at elevated prices. The research firm valued the ADRs at $160 before their latest surge.
For context, the recent volatility echoes broader market dynamics. DRAM ETFs plunged 8% as SK Hynix, Samsung, and Micron stocks tumbled on profit-taking, while Samsung is reportedly weighing a US ADR listing following SK Hynix's record debut.
This article is for informational purposes only and does not constitute financial advice.
