--- title: "\"As Good As It Gets\"! SK Hynix Profits Surge Sixfold, but Institutions Warn: This May Be the Peak" type: "News" locale: "en" url: "https://longbridge.com/en/news/294163821.md" description: "SK Hynix's stock price retreated after delivering record-breaking results. Analyst David Riedel believes its earnings growth may have peaked, with the pullback attributed to the deflation of the AI overheating bubble and a return to reasonable valuations. However, the company's long-term logic remains solid: the traditional memory business holds value, long-term agreements defend against price volatility, and management is inclined to limit capacity expansion to maintain tight supply and demand while increasing Total Shareholder Return" datetime: "2026-07-29T06:48:12.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294163821.md) - [en](https://longbridge.com/en/news/294163821.md) - [zh-HK](https://longbridge.com/zh-HK/news/294163821.md) --- # "As Good As It Gets"! SK Hynix Profits Surge Sixfold, but Institutions Warn: This May Be the Peak SK Hynix delivered a record-breaking performance report, but the market's reaction was not one of pure celebration. While analysts acknowledged the value of its basic factors, they directly pointed out a core issue: this may well be the peak of its performance. In response to SK Hynix's historic profitability, David Riedel, an analyst at Riedel Research, offered a rare and blunt judgment—"I think it really can't get any better than this." He stated that **while the sixfold growth in profitability is certainly impressive, the recent partial decline in the stock price is merely a normal correction of the overheated AI market bubble.** At the same time, he emphasized that SK Hynix's long-term logic remains unshaken and believes the stock still has considerable upside potential. From a market perspective, chip stocks have recently faced pressure from multiple directions: concerns among US investors over circular lending issues among AI companies, compounded by the impact of competitive chip products. David Riedel believes these factors collectively contributed to a phased retreat in stock prices, noting that SK Hynix's 120% surge in just a few months had already accumulated excessive sentiment premium. ## How to Price the Growth Path After Record-Breaking Results SK Hynix demonstrated strong profitability this quarter, but David Riedel directly characterized it as a phased high point. "A sixfold increase in earnings—I think this is the peak," he said: > "The market previously piled on too much AI hype, and this premium deserved to be squeezed out." He does not believe there has been a substantive deterioration in basic factors, but rather characterizes the current adjustment as a return to reasonable valuation ranges. "Now we are back to reasonable valuations and reasonable prospects. These chip stocks still have a long way to go, it's just that they can't run the entire distance in one breath as they did before." In his view, after the active digestion of the stock price, the subsequent trend will be more sustainable. ## Repricing the Memory Business: The Undervalued "Boring Sector" Against the backdrop of AI concepts dominating market narratives, the value of traditional memory chips was once obscured. David Riedel provided a clear reassessment: he believes that **the "boring memory business" will prove valuable in the future, and SK Hynix's basic factors story in this sector remains intact.** One of the key factors supporting this judgment is the long-term supply agreements SK Hynix has signed with its customers. David Riedel pointed out that the structural arrangement of such agreements aims to defend against memory price volatility, providing an effective buffer for the predictability of the company's revenue. This ensures that even amidst short-term market sentiment fluctuations, the long-term supply-demand landscape and pricing power remain solid. ## Strategic Choices Amidst Ample Cash Flow Perhaps more noteworthy than the financial data itself is another signal conveyed by SK Hynix in its earnings release—**the company explicitly stated it would "meaningfully expand shareholder returns."** David Riedel believes this statement itself is highly illustrative. "They are not considering adding extra capacity at all," he analyzed. "They are happy to see the market maintain a certain degree of tight supply and are content to enjoy this situation as a major player, while sharing part of the profits with shareholders." He further pointed out that with the stock price having risen significantly and ample cash on hand, large-scale capacity expansion is not strategically sound. Whether ultimately implemented through buybacks or dividends, returning excess cash to shareholders is the superior choice. This strategic signal implies that management intends to keep market supply tight to protect memory prices and profit margins, rather than trading scale for market share. ### Related Stocks - [SKHY.US](https://longbridge.com/en/quote/SKHY.US.md) - [07709.HK](https://longbridge.com/en/quote/07709.HK.md) - [03121.HK](https://longbridge.com/en/quote/03121.HK.md) ## Related News & Research - [SK hynix Stock Is Down 35% From Its Peak – But Nothing’s Changed, says UBS](https://longbridge.com/en/news/294360643.md) - [How to Play SK hynix Stock After Revenue Misses Expectations](https://longbridge.com/en/news/294394036.md) - [SK Hynix's earnings 'really as good as it gets': Analyst](https://longbridge.com/en/news/294140565.md) - [SK Hynix Earnings Could Decide Whether Wall Street Has Misread The AI Memory Selloff](https://longbridge.com/en/news/294114800.md) - [SKHY Stock Forecast – Here's Why UBS Is Bullish on this Memory Chip Giant](https://longbridge.com/en/news/294458158.md)