TLDR
- Micron (MU) stock was up about 4% pre-market on Wednesday after SK Hynix reported record third-quarter results.
- SK Hynix said memory demand should outpace supply through 2030, with DRAM and HBM supply sold out for three years.
- SK Hynix posted 104.62 trillion won in revenue, an 80% operating margin, and a 100 trillion won investor payout pledge.
- Bank of America repeated its Buy rating and $1,550 price target on Micron.
- Micron can start major buybacks on Dec. 9 under its 2024 U.S. Chips Act funding.
Micron Technology (MU) stock traded up about 4% in pre-market on Wednesday. The move followed record third-quarter results from memory peer SK Hynix.
MU closed Tuesday up 2.77% and has more than tripled this year. Even so, it still trades at a cheap valuation because of worries about the memory cycle.
SK Hynix reported revenue of 104.62 trillion won, its first quarter above 100 trillion won. Operating profit rose 632% from a year earlier to 83.33 trillion won.
That works out to an operating margin of about 80%. It was the sixth straight quarter of record revenue and operating profit.
SK Hynix’s US-listed receipts rose 7.7% pre-market. Its Seoul-listed stock closed up almost 11%.
What SK Hynix Told Investors
The line that grabbed the most attention was in the outlook. SK Hynix said demand should outpace supply through 2030.
It also said its DRAM and high-bandwidth memory supply is effectively sold out for the next three years. Long-term agreements already cover a large part of 2027 and 2028 output.
Wall Street has been pricing in a possible dip in memory prices after 2028. That is when seven new memory plants from SK Hynix and Samsung are set to come online, according to Trendforce.
HBM4 entered full-scale mass production in the third quarter. SK Hynix expects it to pass HBM3E in shipments and revenue in the fourth quarter.
The company also guided for mid-20% DRAM bit shipment growth in the fourth quarter. CFO Kim Woo-hyun said it will return about 100 trillion won to investors through fiscal 2026.
That includes at least 30 trillion won in cash dividends and at least 60 trillion won in buybacks and cancellations. It is the largest such pledge in the company’s history.
Micron’s Own Catalysts
Bank of America reiterated a Buy rating and $1,550 price target on Micron. Its analyst said he came away “incrementally more positive on memory” after executive meetings.
Hana Securities kept Micron on its list of 10 global AI picks. Elon Musk’s view that humanoid robots could need more memory than any other use also made the rounds.
Form 4 filings for Oct. 27 show insider activity. Several institutions also reported bigger stakes in recent 13F filings.
The S&P 500 closed Tuesday at 7,722.60, up 0.6%, and the Fed is widely expected to hold rates steady Wednesday. Traders will be listening for any hawkish language.
UBS analyst Timothy Arcuri thinks Micron could start with about $20 billion of buybacks a quarter. He sees that rising to about $50 billion by the end of fiscal 2027, and Micron can begin major repurchases on Dec. 9.
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