SK Hynix Gains as AI Memory Shortages Boost Demand

SK Hynix shares climbed in premarket trading on Wednesday, October 28, 2026, as limited supplies of advanced memory chips used in artificial intelligence systems strengthened the South Korean semiconductor manufacturer's pricing power. Stephen Innes, managing partner at SPI Asset Management, said rising demand for high-bandwidth memory (HBM) is helping the company generate revenue while major technology firms face mounting pressure to justify their AI investments.

According to the Yahoo Finance report published October 28, SK Hynix's U.S.-listed shares jumped 8% before the market opened. The stock subsequently traded 2% higher at $145.36, although it remained down 21% for October.

Innes highlighted the company's position in the AI supply chain, where memory components have become increasingly important to the performance of advanced computing systems. SK Hynix supplies memory used by Nvidia, benefiting from competition among customers seeking limited supplies.

"Right now, SK Hynix is still sitting at the toll booth, and the cash machine is humming," said Stephen Innes, managing partner at SPI Asset Management, in a post on Substack.

He argued that semiconductor manufacturers supplying essential AI components face a different financial situation from businesses developing AI models and operating data centers. Those businesses must find ways to generate revenue from their services while managing substantial electricity, financing and depreciation costs.

"Memory used to sit at the back of the technology factory. AI has dragged it to the front gate and handed it the keys," Innes said.

The shift has increased the strategic importance of memory production as technology companies expand their AI infrastructure. Innes said SK Hynix is already earning revenue from components required by companies investing heavily in AI systems.

"SK Hynix sits on the other side of that cheque. It is already getting paid," Innes said.

He also emphasized how constrained supply can benefit producers when demand exceeds available capacity.

"Scarcity has a wonderful way of simplifying the income statement," Innes said.

Long-term supply agreements represent another important factor in SK Hynix's outlook. According to the report, the company has signed agreements with 14 major customers covering more than half of its production capacity for 2027 and 2028. The contracts typically run for five years, allow prices to move within agreed ranges and may be extended, with further extensions under discussion.

SK Hynix said its DRAM and HBM supplies are sold out until 2029. Demand for HBM is twice the volume the company can supply, and it expects memory shortages to continue through 2030.

Innes cautioned that long-term agreements cannot eliminate the cyclical nature of the memory industry, which has historically experienced price downturns following periods of expansion.

"Those contracts will not kill the cycle. Nothing kills the memory cycle. But they may blunt its teeth," Innes said.

The broader U.S. technology market also drew attention ahead of corporate earnings and the Federal Reserve's October 28 policy decision. CNBC reported that S&P 500 futures rose 0.12% and Nasdaq-100 futures advanced 0.40%, while Dow futures fell 93 points, or 0.18%, in early trading.

In the previous session, the Nasdaq Composite gained 1.2%. Broadcom rose 4% after announcing that a group of banks would provide $63 billion in financing for its chips and networking solutions to be leased to Anthropic. Advanced Micro Devices climbed 5.5%, while Micron Technology advanced 2.8%.

Investors were also preparing for earnings from Alphabet and Microsoft after Wednesday's closing bell, with questions about the cost and financing of AI development remaining central to the technology sector's outlook.

Mike Wilson, Morgan Stanley's chief U.S. equity strategist, offered a more constructive assessment of the recent market correction during an appearance on CNBC's Closing Bell on Tuesday.

"Most of the correction is already over," Wilson said.

He described the adjustment as a period in which investors had already absorbed much of the pressure on technology stocks.

"We've been in correction mode for four or five months... the market I think has digested this very efficiently," Wilson said.

The Federal Reserve was widely expected to hold its benchmark interest rate at a target range of 3.75% to 4% following its two-day meeting. CNBC reported that the decision was scheduled for 2:00 p.m. Eastern Time on Wednesday, as investors assessed the implications for financial markets and corporate investment.