Bain Capital has officially exited Kioxia Holdings Corp., realizing a significant gain after the memory chipmaker's stock surged more than 4,000% since its December 2024 IPO. While the private equity firm has completely divested its position, SK Hynix Inc. continues to hold a roughly 14% stake in the Japanese company. This retention offers investors exposure to the growing demand for NAND flash memory used in artificial intelligence infrastructure, a segment often overshadowed by high-bandwidth memory (HBM).

Bain Capital's Exit

Bain confirmed the complete divestment of its Kioxia stake this week. The firm had been gradually selling shares following the company's public listing. The exit marks the conclusion of an investment that began in 2018 when Bain led the $18 billion acquisition of Toshiba Memory, which was later rebranded as Kioxia. The post-IPO rally transformed the business into one of Japan's top stock market performers.

SK Hynix's Continued Investment

A special-purpose investment vehicle established for SK Hynix maintains ownership of approximately 14% of Kioxia. Market participants primarily value SK Hynix for its dominance in HBM, the premium chips utilized in Nvidia Corp's AI accelerators. However, the Kioxia holding provides a secondary avenue for participation in the AI hardware stack, specifically in enterprise storage solutions.

Expanding AI Memory Demand

The focus on AI investing has historically centered on graphics processing units (GPUs) and HBM. Demand for enterprise NAND flash memory is now increasing as companies deploy larger AI models and inference workloads. Kioxia is reportedly preparing for the mass production of next-generation flash memory designed specifically for AI applications. This development highlights the broadening scope of the memory boom beyond HBM.

Strategic Positioning

SK Hynix's strategy encompasses both the sale of HBM chips for current AI servers and an equity stake in a major beneficiary of AI-driven NAND demand. While the company is recognized for its leadership in HBM and DRAM, the Kioxia investment represents a distinct asset within its portfolio. Should the demand for AI storage accelerate, this ownership position may gain greater significance in the company's overall investment narrative.

Jim Cramer has identified SK Hynix as a compelling investment opportunity ahead of its Nasdaq debut through American depositary receipts on Friday, citing the artificial intelligence (AI) boom as a primary catalyst. The host of Mad Money argued that surging demand for high-bandwidth memory used in AI accelerators positions the company as a major beneficiary, though he advised investors to limit their initial exposure due to the sector's inherent volatility.

Cramer highlighted that the memory-chip market is currently experiencing significant growth, driven by the needs of AI infrastructure. Despite a massive rally since the launch of OpenAI’s ChatGPT in late 2022, he believes the stock remains attractively valued. Cramer pointed out that while the company's memory chips sell at a premium, the stock trades at just over seven times this year's expected earnings.

However, Cramer cautioned that the memory-chip industry has a long history of boom-and-bust cycles. He explained that periods of soaring demand and profits are typically followed by increased production, which eventually leads to falling prices and weaker earnings. He emphasized that investors must be mindful of this cyclical risk, even as AI reshapes the industry's long-term outlook.

The recommendation comes as SK Hynix shares have declined roughly 25% from their June 25 peak, reflecting broader weakness across memory-chip stocks. Cramer suggested a measured approach for those interested in the stock, advising investors to put on a small position and leave room to buy more into weakness rather than making a large upfront bet.

At the time of writing, SK Hynix shares were up 2.47% at 2,240,000 won ($1,483.84) in Seoul.