SK Hynix's record profit fails to impress investors

What happened: US-listed shares of representation shaper SK Hynix (000660.KS, SKHY) declined by much than 1% connected Wednesday successful premarket trading, extending losses of much than 8% successful the anterior session.

What's down the move: SK Hynix reported a grounds 2nd 4th operating profit, which roseate 557% from a twelvemonth earlier but fell abbreviated of lofty expectations, fueling capitalist concerns astir whether AI-related spending tin prolong its accelerated pace.

The net miss reflected a little favorable merchandise premix alternatively than weakening request for AI representation chips. Management reiterated that request is expected to outpace proviso done 2030.

The South Korean representation shaper besides said it plans to boost 2026 superior spending by astir 50% to astatine slightest $31 cardinal arsenic it ramps up AI representation production, raising capitalist concerns astir imaginable overinvestment successful AI infrastructure.

Barclays analysts chopped their terms people connected US-listed banal to $300 from $330 pursuing the results, but inactive support an Overweight rating. Susquehanna analysts besides chopped their terms people connected the South Korean shares.

What other you request to know: The determination comes aft SK Hynix tumbled much than 8% successful the anterior league amid concerns implicit rising competition, AI-related financing deals successful the spot sector, and whether hyperscalers' monolithic AI investments volition make capable returns.

In Asia, investors erstwhile again dumped spot stocks such arsenic Samsung (005930.KS) and SK Hynix, driving the KOSPI Composite (^KS11) down astir 6% on Wednesday.

A beardown debut from Chinese representation shaper CXMT (688825.SS) successful Shanghai this week besides reignited concerns that expanding representation proviso could unit spot prices.

Semiconductor stocks person been astatine the halfway of the artificial quality commercialized this year, helping propulsion the assemblage to grounds highs successful June. Since then, spot stocks person fallen sharply arsenic investors question whether hyperscalers' tremendous AI spending plans volition construe into capable returns.

Last week, Alphabet (GOOG, GOOGL) banal plummeted aft the tech elephantine announced it would rise its superior spending outlook arsenic it builds retired its AI infrastructure.

Investors are present focused connected upcoming results from Microsoft (MSFT), Amazon (AMZN), and Meta (META), each of which are expected to denote further increases successful AI-related spending.

Any hint of a slowdown, however, would spell occupation for the companies that marque semiconductors and related equipment. Concerns that the Federal Reserve could resume raising involvement rates person besides weighed connected sentiment.

Ines Ferre is simply a elder concern newsman for Yahoo Finance. Follow her connected X astatine @ines_ferre.

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