Korea’s SK Hynix shares make stellar US market debut, rocket 13% on continued AI optimism
Korea’s second most valuable company is the latest beneficiary of the AI-driven investment wave that has fuelled massive interest in chipmakers expected to gain from the boom in artificial intelligence, which has triggered hundreds of billions of dollars in capital spending.
SK Hynix’s American depositary receipts (ADRs), with 10 ADRs representing one common share, opened at $170 each. The shares were priced at $149 in the offering, a 2.7% premium to the stock’s average price over the previous three trading sessions in Seoul.
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The listing marks the second-largest U.S. share sale after SpaceX’s record IPO last month and is expected to provide funding for new factory construction while giving SK Hynix direct access to the world’s largest investor base. The offering was subscribed more than seven times, a source told Reuters on Thursday.
Recent rout in chip stocks
Chip stocks have, however, lost some momentum in recent weeks following an extraordinary rally, as investors grow cautious about the pace of future AI spending. SK Hynix’s Seoul-listed shares have fallen about 25% from the record high touched two weeks ago. Even so, the stock remains roughly 630% higher than it was a year earlier.
Soaring demand, meagre supply
Heavy spending by major technology companies on advanced AI processors has made high-bandwidth memory (HBM) chips increasingly scarce, pushing up prices and making manufacturers some of Wall Street’s most favoured AI bets. Investors increasingly see the sector as supplying the “picks and shovels” needed to power the AI boom.
Micron, SK Hynix’s U.S.-based rival, has also seen its shares climb 711% over the past 12 months. Analysts say the U.S. listing could help narrow the valuation gap between the two companies by broadening SK Hynix’s investor base and improving access for global investors.Despite its leadership in HBM chips, SK Hynix trades at about 5.8 times forward earnings, compared with around 7 times for Micron, according to a Reuters report.
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As technology companies race to build faster and more capable AI models, they continue to invest hundreds of billions of dollars in the infrastructure needed to support the technology, raising capital through equity offerings and debt markets to finance the expansion.
SK Hynix’s listing comes about a month after Elon Musk’s SpaceX went public in the largest initial public offering on record. SK Hynix’s valuation has risen more than sevenfold over the past year as demand for AI infrastructure has caused a shortage in computer memory and sent prices skyrocketing.
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