Profit surges 7-fold, revenue breaks 100 trillions for the first time: SK hynix (SKHY.US) responds to AI bubble concerns with record-breaking quarterly report

According to Jinse Finance, SK Hynix (SKHY.US) announced its results for the third quarter of fiscal year 2026 on October 28. Both revenue and profit exceeded market expectations, and this performance was regarded by the market as a strong response to doubts about whether the "AI infrastructure investment boom can continue." The financial report shows that the company's revenue for the quarter was 104.62 trillion KRW, a year-on-year increase of 328%. Quarterly revenue surpassed 100 trillion KRW for the first time, beating market forecasts; operating profit was 83.33 trillion KRW, up about 7 times year-on-year. The operating profit margin reached a new record high of 80% for a single quarter, also exceeding expectations.

It is worth noting that net profit for the quarter was only 39.78 trillion KRW, below market expectations. The company disclosed a non-operating loss of 32.63 trillion KRW for the quarter, including a foreign exchange-related loss of 11.63 trillion KRW and an investment asset loss of 22.92 trillion KRW. After the financial results were released, SK Hynix's US OTC shares rose about 3% after hours.

Breaking down by volume and price, DRAM shipment volume increased by about 10% quarter-on-quarter, and average selling price (ASP) rose 20% in the latter part of the quarter; NAND shipment volume declined slightly week on week, while ASP increased about 20% mid-quarter. The main driver was rising proportion of high value-added server products.

SK Hynix has consistently prioritized signing long-term contracts with clients including NVIDIA. Like rivals Samsung Electronics and Micron Technology, in recent years the company has shifted its production focus to HBM, leading to tightening supply of conventional memory.

In terms of outlook, the company expects DRAM shipments to grow by around 20% quarter-on-quarter in the fourth quarter, and HBM4 is expected to surpass HBM3E in both shipments and revenue in Q4 to become its flagship product. Supply negotiations for HBM for 2027 have been concluded. The company has signed long-term supply agreements with 14 core clients (including major global cloud providers), locking in more than 50% of production capacity for 2027-2028.

SK Hynix expects capital expenditure in 2027 to increase significantly over this year, with spending directed toward advanced node portfolios, equipment investment for initial capacity ramp-up, and accelerated infrastructure investment in Korea and overseas. The company judges that, due to the complexity of advanced processes and factory construction cycles, memory supply shortages will persist until 2030.

The company also announced shareholder returns for fiscal 2026 totaling about 1 million trillion KRW, including over 30 trillion KRW in cash dividends and more than 60 trillion KRW in share repurchases and cancellations. The third quarter per-share dividend will be 20,000 KRW, of which 10,000 KRW will be a special dividend from Kioxia investment returns.

As a core HBM supplier to NVIDIA (NVDA.US), SK Hynix is one of the biggest beneficiaries of the current AI wave. Its operating profit margin remains at historical highs, reflecting tight supplies. The company expects memory chip supply shortages to last until 2030 and has signed long-term agreements with 14 major clients, locking in over 50% of its capacity for 2027-2028.

According to Counterpoint Research, the surge in profits this quarter was mainly due to a rapid rise in prices for standard DRAM and NAND. Quarterly profits have not yet peaked, and an upward trend is expected to continue at least until 2027.