An analyst upgrades SK Hynix after a soft quarter, citing the company's high-bandwidth memory leadership and long-term positioning.

SK hynix (SKHY), a leader in high-bandwidth memory (HBM) products, delivered blowout second-quarter results driven by surging demand for HBM, DRAM, and NAND flash. The results indicate that the AI boom shows no signs of slowing.

The company's revenues soared 257 percent year-over-year, with operating margins reaching all-time highs, fueled by shipment growth and higher average selling prices for both DRAM and NAND. SK hynix is experiencing soaring HBM demand, driven by accelerating adoption of artificial intelligence and specifically agentic AI applications.

Reflecting confidence in sustained AI-driven demand, the memory maker now expects to raise its capital expenditures by at least 50 percent year-over-year. The company maintains a dominant approximately 58 percent share of the global HBM market.

The risk-reward profile remains attractive given SK hynix's market leadership and robust AI tailwinds, combined with an extremely low valuation of 3.6 times forward earnings.

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