Profit surges 7-fold, revenue tops KRW100 trillion for the first time: SK Hynix (SKHY.US) responds to AI bubble debate with record quarterly results

SK Hynix (SKHY.US) released its fiscal 2026 third-quarter results on October 28. Both revenue and profit exceeded market expectations, and the results were seen by the market as a strong response to doubts over whether the AI infrastructure investment boom can be sustained. The report showed that quarterly revenue was KRW104.62 trillion, up 328% year on year, marking the first time quarterly revenue topped KRW100 trillion and beating market expectations; operating profit was KRW83.33 trillion, up about 7-fold year on year, with an operating margin of 80%, a record high for a single quarter, also exceeding expectations. Notably, quarterly net profit was only KRW39.78 trillion, below market expectations. The company disclosed that it recorded KRW32.63 trillion in non-operating losses in the quarter, including KRW11.63 trillion in foreign-exchange-related losses and KRW22.92 trillion in investment-asset-related losses. After the results were released, SK Hynix's US shares rose about 3% in after-hours over-the-counter trading. Breaking down volume and price, DRAM shipments rose about 10% quarter on quarter, with average selling price (ASP) up in the high-20% range quarter on quarter; NAND shipments fell slightly quarter on quarter, with ASP up in the mid-20% range, driven mainly by a higher share of high-value-added server products. SK Hynix has consistently prioritized long-term contracts with customers including NVIDIA Corporation. Like competitors Samsung Electronics and Micron Technology, Inc., the company has in recent years shifted its production focus toward HBM, tightening supply of conventional memory. In its outlook, the company expects fourth-quarter DRAM shipments to grow in the mid-20% range quarter on quarter, HBM4 to surpass HBM3E in both shipments and revenue in the fourth quarter to become the main product, and HBM supply negotiations for 2027 to have been completed. The company has signed long-term supply agreements with 14 core customers (including major global cloud service providers), locking in more than 50% of capacity for 20272028. SK Hynix expects capital expenditure in 2027 to increase significantly from this year, with spending on equipment investment for advanced-node mix and first-year capacity ramp-up, as well as accelerated growth in infrastructure investment in South Korea and overseas. The company judges that, constrained by advanced-process complexity and construction cycles, the memory supply shortage will persist until 2030. The company also announced total shareholder returns of about KRW100 trillion for fiscal 2026, including more than KRW30 trillion in cash dividends and more than KRW60 trillion in share buybacks and cancellations; the third-quarter dividend is KRW20,000 per share, of which KRW10,000 is a special dividend from investment gains related to Kioxia. As a core HBM supplier to NVIDIA Corporation (NVDA.US), SK Hynix is one of the biggest beneficiaries of the current AI boom. Its operating margin remains at a historical high, reflecting tight supply. The company expects the memory chip supply shortage to last until 2030 and has signed long-term agreements with 14 major customers, locking in more than 50% of capacity for 20272028. Counterpoint Research noted that the profit surge this quarter stemmed mainly from rapid price increases in conventional DRAM and NAND, and quarterly earnings have not yet peaked, with the upward trend likely to continue at least through 2027.