TradingKey - On Friday, SK Hynix (NASDAQ: SKHY) shares trading closed at around $143.73. The previous day's share price had a daily trading range of $143.51 - $162.65. Last week was an example of the chaotic 2026 AI memory trading. Record Q2 results with a historic 76% operating margin led to a sell off of 9% due to concerns over the sustainability of the price. This was followed with a 30% increase on Friday as KOSPI was up 17.91% and Amazon's AI business projection extended to 2028.

SKHY was 35% down in July from the peak with a current 52-week trading range of $124.80 - $194.80, an average price target of $245.46. The 61.8% Fibonacci level of $155.19 will be a significant resistance level for Monday.

The Q2 Result That Was Too Good and Still Caused a Selloff

SK Hynix Q2 2026 memory of $79.3 trillion KRW (up 51% Q-o-Q and 257% Y-o-Y) and an operating income of $60.5 trillion with a record 76% operating margin. For Q2, DRAM prices surged 30% and NAND nearly mid-50%. For HBM4, mass production started in Q2 with a ramp up planned for the second half of 2026. Management secured ten long term customer contracts and plans HBM4E production level in 2027.

As seen with the sell-offs of Alphabet, Meta, and Micron, a 9% sell off in SK Hynix shares occurred as a result of the Q2 2026 results, with investors expressing concerns over the pricing environment. This rapid increase in prices generally is the result of supply constraints and will be the result of a market downturn.

Samsung forecast a supply shortage extending to 2027 and Amazon a projected supply shortage with demand extending to 2028. While supply constraints are a concern for SK Hynix, the market is concerned with cyclical supply constraints.

The 35% July Decline and 30% Friday Recovery

With a plunge of 35% in July, SKHY fell from approximately $194 to $124.80. Following a gain of over 50% in early 2026, this was a sentiment correction due to four consecutive occurrences: CXMT's $8.6B IPO, Apple's possible use of Chinese suppliers, selling of AI-infrastructure related Nvidia stock, and SK Hynix's post-earnings drop of 9%. The fundamentals remained intact with Q2 earnings showing record margins, HBM4 output, and 10 new customers.

A recovery of 30% in South Korea resulted in SKHY opening at $159.99 and closing at $143.73 on NASDAQ. Due to a confirmation of AI-infrastructure need by Amazon through 2028 and a warning by Samsung of a memory gap, SK Hynix's prices and orders were validated, and a gap of uncertainty was present for the upcoming Monday Asian session.

Why the Bull Case Is Still Intact

Three main factors substantiate a stronger position for SK Hynix beyond the July selloff. First of all, the HBM technology moat: SK Hynix's HBM3E has supplied Nvidia for over a year and with qualification difficulties at Samsung, Hynix enjoys an extended period at premium prices with the mass production of HBM4 underway. Furthermore, with HBM4E due in 2027, a technology gap exists at least two product cycles.

Second, the 10 long-term customer contracts from Q2 give a similar outlook to Micron's long-term, non-cancelable contracts. Third, according to Morningstar, through HBM for AI, SK Hynix has a significantly long period of growth ahead of it.

SKHY Technical Setup

Currently, on the 4H chart, SKHY is trading at $143.73. SKHY is below the 38.2% Fibonacci retracement level at $141.04 and is providing a bullish opportunity at the $140.96 horizontal support level. The chart indicates the $155.19 level to be critical resistance and is the 61.8% Fibonacci level.

SK Hynix Price Chart - Source: Tradingview

All run attempts are capped by the June peak descending trendline. The RSI is showing a marked improvement to 57.98 from deeply oversold levels. A support hold is targeted at $140.96. A bullish response from support is anticipated at $148.10 (50% Fib) and $155.19 (Critical Resistance Level).

A bullish breakout above $155.19 and the descending trendline has targets at $165.17 and $177.79. A breakdown below $140.96 has the $132.15 level as the next support with the July low at $118.21 as the ultimate support.

Key Levels

• Current: $143.73. Friday range $143.51 to $162.65. 52-week range: $124.80 to $194.80.
• Q2 record: Revenue KRW 79.3T (+257% YoY). Operating margin: 76% (record). HBM4 mass production begun.
• Selloff context: -35% July, -9% earnings day. Then, +30% Friday (KOSPI/Amazon catalyst).
• Contracts: ~10 long-term agreements secured Q2. HBM4E volume production set for 2027.
• Analyst target: $245.46 (5 Buy, 0 Sell), High $355, Low $152. 70% upside from $143.
• Key resistance: $155.19 (61.8% Fib), $165.17, $177.79.
• Support: $140.96, $132.15, $118.21 (July low).

Why Did SK Hynix Fall After Reporting Record 76% Operating Margins?

SK Hynix's post earnings 9% drop mirrors a selloff of Alphabet, Meta and Micron this week in that exceptional results are met with a selloff because investors are concerned about the sustainability of the pricing environment that caused them to achieve such margins. A 76% operating margin in a commodity hardware business raises cycles concerns.

SK Hynix are also at risk from the CXMT IPO that same week showing that China are committed to building significant domestic DRAM capacity.

Friday's 30% recovery suggests that when peak margins are temporary, especially with Amazon's CEO stating there is already significant demand in 2028, the peak margins are temporary. There are structural significant challenges as well.

What Is HBM4 and Why Does SK Hynix's Lead Matter?

High Bandwidth Memory (HBM) 4 is the next generation of advanced DRAM used in Nvidia's AI accelerator chips. The manufacturing of HBM4 is significantly more complex than the already advanced HBM3, requiring stacking of DRAM dies and the application of sophisticated copper-to-copper die bonding with extremely tight fabrication tolerances. Only a small number of manufacturers have the required capabilities and can perform such tasks at a large scale. SK Hynix will become the first manufacturer to begin mass production of HBM4 in Q2 2026.

HBM pioneer Samsung is still in the qualification stage with Nvidia, and CXMT has not disclosed any HBM capability to date. Pricing for High Bandwidth Memory has continued to diverge from standard DRAM with each generation, with HBM4 commanding a significant price premium over HBM3.

Each HBM generation also results in a massive increase in per-die chip bandwidth and a more complex assembly and packaging step. Nvidia's Vera Rubin chip architecture will require significantly more HBM than the previous Blackwell architecture, and thus the potential market for each GPU generation continues to expand. The SK Hynix lead in providing HBM for multiple generations of Nvidia GPUs is the primary reason for the $245.46 average analyst target.

Bottom Line

SK Hynix had a 35% drop in July despite reporting their most successful Q2 with 76% operating margins and the beginning of HBM4 mass production. However, they rebounded with a 30% increase the next Friday after Amazon projected their Aritifical Intelligence outputs would need to span through 2028. Currently, the stock sits at $143.73 which is 41% lower than the 52-week high and also 41% under the average target by analysts which is $245.46.

Based on Fibonacci retracement analysis, $155.19 is a significant resistance level that Monday’s stock price needs to surpass, while the support level is pegged at $140.96. Five analysts maintaining a Buy rating and no one placing a Sell. The argument for selling focuses on the predicted drop in prices for 2027 after more suppliers enter the market.

The Buy argument focuses on the High Bandwidth Memory 4 (HBM4) maintaining a high market price along with 10 long-term agreements, with customers that are predicted to extend through HBM4E in 2027. Most of that debate was settled on Thursday thanks to Amazon’s CEO.

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