SK hynix reports record profit of about $62 billion and says its DRAM and HBM output is booked through 2029.

SK hynix's operating profit surged more than sevenfold from a year earlier to a record 83.33 trillion won ($62.23 billion) in the third quarter. The results helped ease fears of an AI investment bubble and a looming memory chip glut. The chipmaker said its dynamic random-access memory (DRAM) and high bandwidth memory (HBM) volumes are effectively sold out through 2029.

The blowout earnings sent Korean chip stocks soaring on Wednesday. The Kospi rose 6.63 percent to close at 6,012.44 points, its biggest single-day gain since July 31. SK hynix shares jumped 10.89 percent to finish at 1,487,000 won, while Samsung Electronics surged 9.01 percent to 242,000 won.

Operating profit rose 632.25 percent from a year earlier, topping the 76.96 trillion won consensus compiled by market tracker FnGuide. Revenue for the quarter rose 327.89 percent on the year to 104.62 trillion won, surpassing the FnGuide consensus of 98.23 trillion won. Net profit climbed 215.71 percent on the year to 39.78 trillion won, below FnGuide's forecast of 61.29 trillion won.

The Icheon, Gyeonggi-based chipmaker also unveiled a shareholder return policy worth roughly 100 trillion won for fiscal 2026, including a 40 trillion won share buyback that has recently been completed. The full-year plan includes more than 30 trillion won in cash dividends and more than 60 trillion won in share buybacks and cancellations, a figure that includes the 40 trillion won buyback. The third-quarter dividend is 20,000 won per share, or 14 trillion won in total, from gains on the sale of its stake in Japanese chipmaker Kioxia.

Of the 20 trillion won in new share buybacks approved by the board on Wednesday, half will be canceled to boost shareholder value. The remaining 10 trillion won, which is not counted toward the package, will be used for employee compensation.

The roughly 100 trillion won package is nearly seven times last year's 14.3 trillion won, reflecting the flood of cash SK hynix has generated from the AI-driven memory boom.

The biggest takeaway from the earnings call was SK hynix's view of future demand, which extends into 2029, a year beyond the 2028 horizon that chipmakers had previously projected for the memory supply crunch. "Based on the long-term agreement [LTA] volumes we have already secured and the demand under discussion with current customers, our DRAM and HBM volumes for the next three years through 2029 are effectively sold out," SK hynix said during the conference call.

The company said it has secured long-term supply agreements with 14 major customers, including leading cloud service providers, up from 10 in the previous quarter. These contracts run for up to five years, but some customers are already seeking to lock in supplies for even longer.

It remains unclear whether Chinese tech giants are among those customers. Local media reported on Tuesday that Alibaba, Tencent and ByteDance were seeking long-term server memory supply agreements with Samsung Electronics and SK hynix, with some reportedly pushing to extend contracts through 2035.

SK hynix stressed that its outlook is not based simply on optimistic demand forecasts. The volumes under negotiation reflect customers' actual purchasing plans, making them highly likely to translate into orders, it said.

LTAs already cover more than half of SK hynix's total production capacity for both 2027 and 2028. The company plans to maintain a similar proportion of long-term contracts going forward, which should give it greater visibility into demand and reduce its exposure to the memory industry's notoriously sharp boom-and-bust cycles.

SK hynix also pushed back against growing concerns that the billions of dollars being poured into AI infrastructure may not generate enough returns to justify the spending. Its argument was straightforward: AI is increasingly making money. Major hyperscalers reported on-year cloud revenue growth of 30 to 80 percent in their latest earnings, with AI accounting for much of the increase, according to SK hynix. The company also pointed to a growing number of long-term enterprise AI contracts, cloud order backlogs that have expanded two- to fivefold, and a steady rise in paying AI service users. These trends suggest that AI is beginning to generate the revenue and cash flow needed to support further investment, the chipmaker said.

SK hynix added that it does not take customers' spending plans at face value when deciding how much capacity to build. "When assessing demand, we don't just look at customers' capital expenditure or demand forecasts. We also review their financial health, funding capabilities and the readiness of key supply chains before reflecting this in our investment plans," the company said.

Analysts expect SK hynix's earnings streak to continue, with some forecasting that quarterly operating profit will break the 100 trillion won mark for the first time in the fourth quarter. Daishin Securities maintained its buy rating and six-month target price of 3 million won. Eugene Investment & Securities kept its target at 3.7 million won, while DS Investment & Securities maintained its target at 2.64 million won.

Daishin Securities analyst Ryu Hyung-keun expects a sharp increase in DRAM shipments to drive the next earnings milestone. "Quarterly operating profit is expected to exceed 100 trillion won for the first time in the fourth quarter, driven by stronger-than-expected DRAM sales, with shipment volume projected to rise 26 percent from the previous quarter," Ryu said.

Eugene Investment & Securities also sees more room for memory prices to climb in early 2027. The brokerage expects DRAM's average selling price to rise another 17 percent in the first quarter from the previous three months, as price increases for products such as smartphone memory, which were only partially reflected in the second half of 2026, fully kick in. It also expects prices for enterprise solid-state drives (SSDs) to keep rising despite lingering concerns about the broader NAND market.

DS Investment & Securities analyst Son In-jun said the combination of stronger earnings visibility and generous shareholder returns should help restore investor confidence after the recent sell-off in memory stocks. "Demand visibility has stretched out to an unprecedented length, and a strong shareholder return policy is now confirmed," Son said. "Concrete progress on Anthropic's initial public offering and the hyperscalers' earnings reports should also gradually dispel doubts about downstream demand. We expect the memory sector, which recently suffered an excessive share price decline, to continue rebounding."

Sixth-generation HBM4 and server DRAM drove this quarter's earnings. SK hynix said HBM4 will overtake HBM3E in both bit shipments and revenue share in the fourth quarter. Development of next-generation products is also on track, with HBM4E samples supplied to customers in the second quarter.

DRAM shipments rose about 10 percent from the previous quarter, and average selling prices climbed in the high-20 percent range. NAND average selling prices rose in the mid-20 percent range. HBM4 yields have been fairly stable, the company said, and its higher value will be reflected in next year's prices, which should narrow the price gap between HBM and conventional DRAM.