The proliferation of artificial intelligence has driven a surge in chip demand, and all AI accelerators depend on faster, larger memory support. SK Hynix (SKHY), leveraging its leading position in high-bandwidth memory—controlling 50% of the HBM market—has become one of the most important companies in the AI semiconductor ecosystem. HBM market revenue is expected to continue growing rapidly, and the widening supply-demand gap further benefits the company. SK Hynix’s second-quarter revenue grew 3.5 times year-over-year, operating profit increased 6.5 times, and long-term earnings per share growth is expected to reach 82%. Although analysts’ target price implies 25% upside, its mere 11x price-to-earnings ratio is far below the S&P 500’s 23x. Strong earnings growth could drive a valuation premium, delivering substantial returns for long-term investors.
AI accelerators are equipped with high-bandwidth memory (HBM). This is a special type of memory manufactured by vertically stacking multiple dynamic random-access memory (DRAM) chips near the AI accelerator. As a result, HBM can transmit massive amounts of data while controlling energy consumption.
HBM demand has been growing rapidly. SK Hynix estimates that HBM market revenue could grow 58% in 2026, reaching $54.6 billion. More importantly, HBM demand is expected to accelerate in the coming years. Investment bank Citi estimates that HBM bit demand could grow 62% in 2027, followed by an even larger 69% increase in 2028.
Meanwhile, the supply-demand gap in the memory market is expected to widen. Citi estimates that DRAM supply will grow 19% in 2027 and 22% in 2028. This is good news for SK Hynix. According to Counterpoint Research, the company controls 50% of the HBM market, far above Samsung’s 33% share. The company’s share of the overall DRAM market in the second quarter was 25%, second only to Samsung.
SK Hynix’s leadership in HBM enables it to achieve robust revenue and earnings growth over the long term. The company’s second-quarter revenue grew 3.5 times year-over-year, and operating profit increased 6.5 times. Strong HBM demand growth and supply constraints should help SK Hynix maintain such robust growth in the future.
In fact, according to YCharts data, the company’s earnings per share could grow at an annual rate of 82% over the long term. Given its valuation, this makes SK Hynix an extremely attractive buy right now.
According to 11 analysts covering the stock, SK Hynix’s median 12-month target price is $245, implying 25% upside from current levels. Better yet, according to CNN data, the stock is rated a buy by all analysts covering it. However, given that its long-term earnings per share could achieve growth of over 80%, this growth stock could easily surpass that target.
