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.

Nvidia Corp supplier SK Hynix briefly surpassed Samsung Electronics to become South Korea’s most valuable listed company on Monday, driven by surging demand for advanced memory chips used in artificial intelligence infrastructure. Shares of SK Hynix surged 5.7% during trading, lifting the company’s market capitalization to about 2,082.5 trillion won, narrowly edging past Samsung Electronics at 2,081.3 trillion won. This milestone marked a historic shift in South Korea’s corporate hierarchy, with Samsung having held the top spot since 2000.

AI Memory Chip Demand Propels Growth

The rally comes as demand for advanced memory chips continues to soar amid massive investments in AI infrastructure by major U.S. technology companies. SK Hynix has emerged as a primary beneficiary of this trend due to its leadership in high-bandwidth memory (HBM) chips, which are essential components in AI accelerators. At the time of writing, SK Hynix stock was trading 4.7% higher at KRW 2,894,000 in Seoul, while Samsung shares were up 0.14% at KRW 354,500.

Market Performance and Valuation

South Korean memory chipmakers have reported record profits as the rapid buildout of AI data centers has tightened supply and pushed memory prices higher. Investor enthusiasm has been particularly strong for SK Hynix, whose shares have climbed more than 327% year-to-date. In comparison, Samsung Electronics stock has gained roughly 175% over the same period. The following table highlights the comparative market metrics for the two companies.

Semiconductor Industry Shift

In May, SK Hynix joined Samsung Electronics and Micron Technology in surpassing the $1 trillion market value threshold, reflecting investor confidence that AI-related spending will continue driving semiconductor demand. The latest jump reinforces SK Hynix’s growing importance in the AI supply chain as a key supplier of advanced memory products used alongside graphics processing units powering generative AI applications. At the time of writing, SK Hynix had an intraday market capitalization of approximately KRW 2,061.4 trillion, compared with Samsung Electronics’ KRW 2,324.6 trillion.