Memory has emerged as the newest bottleneck in the AI semiconductor value chain. The artificial intelligence (AI) revolution started with a scramble for processing power, as graphics processing units (GPUs) from Nvidia powered large language model training. Although GPUs remain top of mind for hyperscalers, demand has also begun to shift toward custom application-specific integrated circuits (ASICs) designed by Broadcom. Now, the bottleneck has moved downstream to memory chips. Micron Technology stands at the center of this market, designing and manufacturing DRAM and high bandwidth memory (HBM) stacks for GPUs. Sandisk focuses on NAND flash storage and enterprise solid-state drives (SSDs). Both Micron and Sandisk have seen extraordinary returns in the past year. This article will explore another AI memory stock that could offer even more compelling upside and potential to mirror Nvidia's growth.
This Korean semiconductor giant is flying under the radar
Many investors outside Asia have limited familiarity with SK Hynix because the company historically traded primarily on South Korean exchanges and only recently listed American depositary receipts, keeping it out of the spotlight. SK Hynix holds a dominant position in critical segments of AI memory, with a clear majority share in HBM (near 58%), more than double that of Micron and Samsung. In the broader DRAM category, it ranks second with roughly 29% share, trailing only Samsung. For NAND flash, SK Hynix maintains 18% market share, behind Samsung but ahead of Micron and Sandisk. Overall, SK Hynix is a decisive leader over its Western rivals in the memory landscape.
Analyzing SK Hynix's business momentum
SK Hynix's financial results in 2026 demonstrate strong operational performance driven by its dominant market share. In the first quarter, the company reported 52.6 trillion Korean won (approximately $34.5 billion) in revenue, with an operating margin of 72%. The momentum accelerated in the second quarter, with revenue climbing to 79.3 trillion won (about $55 billion USD), representing a 51% sequential increase and a 257% year-over-year surge. Operating profit jumped 61% from the prior quarter and 557% from the previous year. Cumulative revenue for the first half of the year exceeded 100 trillion won, a historical first for the company, indicating strong volume growth and pricing power.
Could SK Hynix become the next Nvidia?
SK Hynix's growth parallels Nvidia's early journey in the AI revolution, as both supply crucial inputs to the AI chip stack: Nvidia with accelerators and SK Hynix with HBM for data flow. Both companies benefit from expanding profit margins due to hyperscalers prioritizing capacity, and multiyear growth from long-term supply agreements and sold-out inventory. Memory shortages are expected to continue into the latter half of the decade as AI capital expenditures rise. Despite its strong performance, SK Hynix's forward price-to-earnings (P/E) ratio is a modest 5.3, significantly lower than Nvidia's during its peak growth. Although cyclical risks exist in the memory industry, the sustained AI demand has set a higher floor for the sector. SK Hynix's continued execution, technological leadership, and strong customer relationships are expected to drive higher earnings and valuation gains, making it a compelling long-term investment in the AI memory sector.
Should you buy stock in SK Hynix right now?
Before investing in SK Hynix, investors should note that The Motley Fool Stock Advisor analyst team did not include SK Hynix in their list of the 10 best stocks to buy now. Their recommended stocks are selected for long-term growth and have historically generated substantial returns, such as Netflix and Nvidia achieving hundreds of thousands to over a million dollars from a $1,000 investment. Stock Advisor aims to beat the S&P 500 by a significant margin, offering a distinct advantage for investors. The article encourages readers to explore this exclusive top 10 list for long-term growth opportunities, emphasizing that investing in such curated picks is designed for sustained performance.
