SK Hynix: South Korean debuts on Wall Street with 2nd biggest IPO in history

SK Hynix's debut on the US stock exchange this Friday (10), after raising US$26.5 billion in a Nasdaq listing, will be a crucial test of investor confidence in the sustainability of the AI boom, coming after a recent pullback in chip stocks.

Chip stocks have lost some momentum in recent weeks after rallying sharply, in part due to investor concerns about slowing AI spending.

Shares in SK Hynix are down a quarter from their all-time high reached two weeks ago. Even so, the company's shares are 650% higher than they were a year ago.

The South Korean chipmaker is the latest to take advantage of a frenzy of investor interest in companies seen as benefiting from big gains from the AI revolution, which has generated hundreds of billions of dollars in capital spending.

"The global chip sector is the most competitive market in the world right now," said Thomas Hayes, president of Great Hill Capital in New York.

"The bankers and the issuer, in this case SK Hynix, are meeting demand where it is. They are seeing excessive valuations and want to take advantage of that."

Shares of SK Hynix rose 2.2% to 2.233 million won ($1,479.98) in Seoul on Friday (10), after the company priced ADRs (American Depositary Receipts) at $149 each, a 2.7% premium to the average share price over the last three trading days.

Ten ADRs are equivalent to one common share.

Large investor groups
The offering, the second-largest share sale in the U.S. after SpaceX's record IPO (initial public offering) last month, will bring resources to SK Hynix to build new factories and give the chipmaker direct access to the world's largest group of investors.

The Icheon, South Korea-based company is the world's largest maker of high-bandwidth memory (HBM) chips, essential for processing large volumes of data in AI-driven graphics processing units (GPUs) produced by companies such as Nvidia and AMD.

Big tech companies' exorbitant spending on these advanced processors has turned HBM chips into a scarce commodity, driving up prices and making manufacturers some of Wall Street's hottest bets as investors see the sector as providing "picks and shovels" for the AI boom.

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Micron, a US-based competitor to SK Hynix, also soared 711% in the last 12 months.

Analysts say SK Hynix's listing on the US stock exchange will help narrow the valuation disparity between the two companies, expanding their investor base and accessibility.

Despite its dominance in the HBM market, SK Hynix trades at around 6.8 times forward earnings, versus around 13 times for Micron, according to LSEG data.

Tech giants competing for faster, smarter AI models are pumping hundreds of billions of dollars into the infrastructure that underpins the technology, raising capital and tapping debt markets to finance costly expansion.

Analysts expect these expenses to continue to grow in the short term. Global capital spending on cloud infrastructure and AI is estimated to approach $1.5 trillion by 2027, a 40% to 50% jump from 2026, according to a BofA Securities note released this week.

However, doubts are growing about the return on these massive investments, raising concerns that hyperscale companies could eventually be forced to slow spending.

"Investors will weigh the strength of last year's rally against this latest volatility...Fears of oversupply are inherent to the sector," said Matt Kennedy, senior strategist at Renaissance Capital, a research firm focused on IPOs and ETFs.

Source: CNN