SK Hynix shares dropped over 9% in Seoul on Thursday, as a broader regional sell-off in semiconductor stocks tracked sharp declines in U.S. chipmakers. The volatility follows investor concerns over AI spending and a South Korean brokerage’s decision to trim profit estimates for the memory chip manufacturer.
Market Volatility in Seoul and the U.S. Tech Rout
The tech sector is experiencing a period of intense turbulence. Following a sell-off in U.S. semiconductor stocks, Asian markets saw significant losses on Thursday. SK Hynix saw its shares tumble more than 9% in Seoul, erasing gains from the previous session. This decline is part of a wider trend that has seen South Korea’s KOSPI index fall roughly 25% from its peak in June.
The pressure on memory makers is global. In the United States, Micron Technology shares fell 5% on Monday, sliding from $979.30 to $930.32. Other major chipmakers also faced downward pressure, with Advanced Micro Devices (AMD) and Lam Research each recording declines of over 4% in recent trading sessions.
The HBM Pricing and Profitability Concerns
Analysts point to a specific catalyst for the recent slide: a shift in outlook for SK Hynix. A South Korean brokerage recently lowered its second-quarter profit estimates for the company, citing a heavy reliance on fixed-price HBM contracts and slower-than-anticipated shipments of HBM4 technology. This news has sparked fears among investors that the profitability of the memory sector could be cooling.
“Today’s decline is largely a follow-on to the US session overnight.”
Rolf Bulk, Head of Semiconductor & Infrastructure Equity Research at Futurum Group, via CNBC
Rolf Bulk also highlighted external factors, such as New York Governor Kathy Hochul’s order for a temporary halt on new large-scale data center projects while the state reviews environmental and energy standards. These developments, combined with reports that CoreWeave is exploring hedges against potential drops in memory prices, have created a more cautious environment for chip investors.
For more on this story, see SK Hynix and Micron Shares Drop as Investors Lock in AI Memory Gains.
Micron Technology and the Industry Valuation Debate
While the memory complex is trading as a single organism, Micron Technology’s position remains a subject of intense debate. Despite the recent pullbacks, Micron is up approximately 243% year-to-date. Bulls argue that the structural shortage of HBM will persist beyond 2027, a view supported by TD Cowen, which recently reiterated a Buy rating with a $1,600 price target.
However, market observers warn that the valuation of the semiconductor sector has reached levels that may be difficult to maintain. As noted by Louis Kondratev, a trader at XFUNDs, semiconductors now account for roughly 20% of the S&P 500—a significant increase from the historical average of 2% to 5% and the 8% seen during the dot-com bubble of 2000.
“Earnings momentum has been very strong, but it’s mostly concentrated in semiconductors, and that momentum may begin to slow as valuations find their place.”
Louis Kondratev, trader at XFUNDs, via CNBC
Financial Commitments and Insider Activity
Micron management continues to emphasize the long-term stability provided by its Strategic Customer Agreements. The company has secured roughly $22 billion in customer commitments through multi-year agreements that include pricing floors. Micron CEO Sanjay Mehrotra has stated that these agreements are designed to significantly enhance the durability and predictability of Micron’s strong financial performance.
Despite this bullish outlook, some market signals remain mixed. Insider selling has been noted, with CEO Sanjay Mehrotra unloading shares across 40 transactions in late June at prices between $1,128 and $1,192. Additionally, EVP April Arnzen sold 32,127 shares on July 1 at prices ranging from $1,077 to $1,095.
As the sector moves forward, analysts are divided on the immediate future. While the consensus price target for Micron sits near $1,486, internal models from some firms suggest a more conservative approach, with some rating the stock as a HOLD near a fair value estimate of $955. Whether the current memory cycle has hit a ceiling or is simply taking a breather remains the central question for investors.
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