-- Shares of SK Hynix Inc (KS:000660) briefly surged to a record high on Monday, extending a raft of recent gains amid growing bets that the South Korean memory chip maker will benefit from its exposure to an artificial intelligence boom.
SK Hynix shares rose 3.6% to 152,000 won, briefly hitting a lifetime high of 153,100 won earlier in the session. The broader KOSPI index rose 1%.
The firm is among the top suppliers of memory chips to NVIDIA Corporation (NASDAQ:NVDA), with the latter at the heart of a massive AI-driven spike in value over the past year. Nvidia is set to report its quarterly earnings later in the week, with analysts predicting a positive outlook.
SK Hynix has nearly doubled in value since the beginning of 2023, given that the firm is also among the only makers of high-bandwith memory (HBM) chips, which are a key component of AI’s high-speed computing requirements.
In this aspect, SK Hynix has an edge over other memory chip makers, including Samsung Electronics Co Ltd (KS:005930) and Micron Technology Inc (NASDAQ:MU).
Recent reports showed that the firm had entered a partnership with TSMC (TW:2330) (NYSE:TSM)- the world’s largest contract chipmaker- to develop more HBM chips and widen its lead on its peers. TSMC\'s Taiwan shares had also recently hit a record high as the firm forecast stronger earnings from AI demand.
SK Hynix may have more upside potential after a strong rally through 2023. The stock is trading at a price-to-earnings ratio of -8.79, substantially lower than its peers. The low PE ratio may signal the potential for more price gains, especially if SK Hynix’s AI bets pay off.
The firm had signaled that an AI boom will help drive more profits in the coming year, after it clocked an operating profit for the fourth quarter of 2023.