Despite record second-quarter profits fuelled by AI demand, SK hynix shares plunged as investors questioned whether the boom can last amid Middle East tensions.
South Korea's SK hynix said on Wednesday that second-quarter net profit soared 1,242% year-on-year, driven by the artificial intelligence industry's surging demand for its advanced memory chips.
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Despite the record result, its shares closed 9.6% lower in Seoul after revenue and operating profit missed market expectations.
The company is a key supplier of high-bandwidth memory chips to US technology giant Nvidia and a pillar of South Korea's tech-led economy.
The global race to build data centres housing AI infrastructure has helped the firm grow significantly, despite concerns that the sector may be overvalued and in a market bubble.
Wednesday's earnings figures, including quarterly net profit of 93.9tn won (€56.9 billion), were described by the Icheon-based firm as "an all-time high quarterly performance".
"We are aware of concerns that AI infrastructure investment might be slowing down," Park Joon-deok, marketing chief of the AI microchip division, said on a call with investors and reporters.
He cited jitters over firms renting data-centre capacity rather than building their own facilities, as well as the emergence of new, more efficient AI models that require lower memory workloads.
"We view these developments not as a scaling back of AI investment, but rather as a process of maximising the utilisation of the massive AI infrastructure built to date and accelerating its monetisation," he said.
Operating profit between April and June jumped 557% from last year to 60.5tn won (€36.6bn).
Revenue stood at 79.3tn won (€48bn), with net profit boosted by a one-off gain from the sale of part of SK hynix's stake in Japanese flash-memory maker Kioxia, another beneficiary of the AI boom.
SK hynix said it intends to make investments in the 40tn won (€24.2bn)range this year.
Growth was attributed to expanding investments in AI infrastructure as the technology evolves into more complex forms requiring greater high-bandwidth memory capacity.
"With major tech companies increasing their AI infrastructure investments, additional supply requests continue to mount," the company said in a statement.
"As these investments are supported by revenue generated from AI services, the momentum in memory demand is expected to persist."
SK hynix eyes major US listing
Parent conglomerate SK Group announced on Saturday plans for a new $500bn (€438.6bn) collaboration with Nvidia to invest in AI infrastructure.
Earlier this month, SK hynix also raised $26.5bn (€22.8bn) through a US offering of American depositary receipts, one of the world's largest-ever equity offerings.
Despite aggressive investments, shares in SK hynix and its larger South Korean rival Samsung Electronics had fallen sharply by 33% and 41% respectively over the month to Tuesday.
SK hynix shares tumbled 14% on Tuesday, the day before the earnings release, and closed a further 9.6% lower on Wednesday after its operating profit and revenue fell short of market expectations.
The earlier decline was attributed to concerns about the sustainability of the AI industry and conflict in the Middle East spooking investors, KB Securities analyst Kim Dong-won said in a note on Monday.
Nonetheless, Kim forecast that memory chip prices were likely to rise "at least 30% in the third quarter", with supply shortages likely to persist until 2028.
Samsung Electronics is due to report its quarterly earnings on Thursday. The company has forecast that its second-quarter operating profit will rise about 1,800% from a year earlier.
