SK Hynix shares surge 13% as AI optimism and easing US inflation reignite chip rally

Shares of SK Hynix soared nearly 13 per cent in Seoul on Wednesday, leading a rally in South Korea's semiconductor sector after softer-than-expected US inflation data lifted global technology stocks and renewed investor optimism around artificial intelligence (AI)-driven chip demand.

The rally mirrored gains on Wall Street, where the S&P 500 and Nasdaq advanced after cooler inflation data and strong earnings from major US banks boosted investor risk appetite despite ongoing geopolitical tensions in the Middle East.

The positive sentiment spilled over to other South Korean chipmakers. Samsung Electronics gained nearly 8 per cent, while chip equipment manufacturer Hanmi Semiconductor jumped around 25 per cent in early trading.

AI demand outweighs concerns over memory cycle

The rebound comes after weeks of volatility in semiconductor stocks, as investors weighed concerns that moderating memory price increases in the second half of 2026 could slow earnings growth for memory manufacturers.

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Markets have also been assessing whether slower capital expenditure by major US cloud service providers, rising financing costs and aggressive capacity expansion plans by memory makers could eventually ease the industry's tight supply-demand balance.

However, analysts believe structural demand from AI applications continues to support the sector.

According to Meritz Securities, DRAM suppliers are currently able to meet only 75-80 per cent of market demand, with supply shortages expected to intensify further in the second half of 2026. The brokerage estimates fulfilment rates could slip into the 60 per cent range in 2027, even after excluding speculative demand.

The firm expects tightening supply to keep memory prices elevated, supporting stronger earnings and further upside for semiconductor stocks.

Brokerages remain bullish on AI memory makers

Several global brokerages have also turned increasingly optimistic on the sector.

HSBC said improving profitability of AI services should sustain robust cloud infrastructure spending, while the industry's shift towards three-to-five-year supply agreements is expected to improve earnings visibility and reduce volatility over the coming years.

Meanwhile, Barclays initiated coverage on SK Hynix's newly listed American Depositary Receipts (ADRs) with an 'Overweight' rating and a $330 price target. The ADRs surged nearly 28 per cent on the Nasdaq overnight.

Goldman Sachs also noted that the recent selloff in South Korean semiconductor stocks had been exacerbated by ETF-related position unwinding rather than any deterioration in industry fundamentals.

Adding to the bullish outlook, SK Hynix Chief Executive Kwak Noh-jung recently warned that the global memory industry could face its worst-ever supply shortage in 2027, with demand expected to outpace the company's production capacity well into the next decade despite aggressive expansion plans.

The comments reinforce expectations that the AI boom will continue to drive robust demand for high-bandwidth memory (HBM) and other advanced memory chips, positioning SK Hynix among the key beneficiaries of the next phase of AI infrastructure investment.