SK Hynix Inc. (NASDAQ: SKHY) shares hit their first-ever intraday price limit on Friday, surging 29.95% to close at 1.718 million won. The milestone move reflects a sharp recovery in Asian semiconductor stocks following a steep sell-off earlier in the week driven by AI valuation concerns and competition from Chinese memory chipmakers. The rally was further fueled by stronger-than-expected cloud earnings from Amazon.com Inc. and Microsoft Corp., which sent the iShares Semiconductor ETF up 8.5% overnight.

The stock opened 28.37% higher at 1.697 million won before climbing to the South Korean exchange's 30% daily cap, a limit raised from 15% in June 2015. In after-hours trading on the NASDAQ, SK Hynix's American depositary receipts climbed 3.29%. The surge also amplified the value of a recent stake purchase by SK Group Chairman Chey Tae-won, who bought 3,620 shares for 4.9 billion won ($3.41 million) on Thursday; the position gained approximately 1.3 billion won ($904,000) in value within a single day.

Record Earnings Drive Momentum

The market reaction follows SK Hynix's report of record second-quarter results, underpinned by booming demand for AI memory chips. While revenue more than tripled to a record 79.32 trillion KRW (about $56.7 billion), operating profit rose 557% year over year to 60.54 trillion KRW (about $43.2 billion). This figure fell short of analyst estimates of 64 trillion KRW (about $45.7 billion), though net profit climbed significantly to 93.92 trillion KRW (about $67.1 billion), aided by non-operating gains. The company posted a record 76% operating margin during the period.

Supply Dynamics and Outlook

Analysts continue to view tight supply and robust AI-driven demand as key supports for the memory sector. Wolfe Research analyst Chris Caso noted that meaningful oversupply is unlikely before 2028 due to the extended timeline required to build new chip manufacturing capacity. Despite risks from pricing pressure and Chinese competition, SK Hynix remains a central player in the AI memory market, with investors balancing near-term earnings strength against longer-term supply chain dynamics.

SK Hynix Inc. (NASDAQ: SKHY) shares declined by 2.97% to $123.02 during Thursday’s premarket session, reflecting a broader risk-off sentiment among traders in the semiconductor sector. The decline occurred despite a firmer overnight tape, with Nasdaq futures up 0.57% and S&P 500 futures gaining 0.36%. This divergence highlights specific caution within the memory trade, where investors are weighing tight chip supply and artificial intelligence demand against pricing risks and competition from China.

The recent price action follows a volatile month for memory-chip makers, including Micron Technology Inc., as market participants reassess whether pricing gains fueled by AI demand can sustain momentum. Wolfe Research senior analyst Chris Caso told CNBC on Wednesday that the semiconductor pullback reflects a reset in expectations after a sharp rally. He noted that the SOXX index doubled over roughly three months before falling about 25% from its high.

Supply Constraints Support Long-Term Outlook

Despite the short-term weakness, fundamental supply dynamics remain supportive for memory stocks. Caso emphasized that memory suppliers are severely supply constrained because they cannot quickly increase output. He stated that oversupply risk looks distant because the industry lacks enough physical space to produce the semiconductors customers want. Any potential oversupply cycle may not emerge before 2028 at the earliest, as new capacity requires new buildings that take significant time to complete.

Susquehanna senior equity research analyst Mehdi Hosseini echoed the need for patience, telling CNBC on Tuesday that the “easy money” in memory stocks has largely been made. However, he remains constructive on the industry’s longer-term outlook. Hosseini noted that while memory stocks have surrendered a significant portion of their recent gains over the past month, they continue to outperform levels seen three months ago.

Investment Strategy and Market Timing

Hosseini advised investors without exposure to the sector to wait rather than chase recent weakness, predicting better pricing opportunities over the next month or two. He added that investors typically return to the memory sector in late summer. The next phase of the market depends on whether commodity memory prices can move sideways or roll over, similar to past cycles.

What the Numbers Show

The divergence between SK Hynix’s premarket decline and broader market strength underscores a rotation within the tech sector. While indices like the Nasdaq gain ground, individual chip names face pressure from profit-taking after substantial rallies. The data suggests that while immediate upside may be limited, structural supply constraints provide a floor for memory stocks, delaying any oversupply risks until at least 2028.