SK Hynix: The Most Undervalued AI Stock in the Market?

**LGD Set** (0:00)
Here's a question I know you've been asking. Is the AI trade over in our memory stocks the biggest driver of the AI bottleneck actually cyclical and due for a downturn? Well, the answer is yes if you listen to social media, but if you actually look at the data and demand for memory, it turns out that profits are up and only expected to get a lot bigger in the years to come. So the real question you should be asking is, how much higher can they go? What's up everybody, it's LGD Set here, and welcome to Milk Road AI, the daily AI show that never thought I would end up caring so much about the Korean stock market, but these days it's got me up all night. Today is August 4th, 2026
SK Hynix has been one of the most popular trades of the year, and it recently hit a pretty volatile stretch as the Korean market still sits 30 percent below all-time highs while US stocks absolutely rip. Our lead researcher Martin thinks it's due to reprice aggressively as its operating margin continues to grow, and profits are due to expand by 60 percent in 2027, up to 288 billion, an astounding number. Today, he'll walk us through the products they offer and how they've doubled their margins, plus look at price targets for this very contentious trade.
All of his moves are available for a dollar in Milk Road PRO, including his full portfolio and daily updates on all his holdings in the broader market. Check it out at the link below. A reminder that our podcast today is free and it wouldn't be possible without our partners at Securitize, the regulated rails for tokenization, and BitGet, Stoxx 2 with real liquidity, real dividends. Keep an ear out later in the show for a message from them. Martin, welcome back on the show. I'm excited to learn about how maybe Memory has not topped, like everybody is saying it has. Tell me about SK Hynix and everything else you got today.

**Martin** (1:40)
Yeah. I think the whole Milk Road team, we have been so bullish on Memory for a while now.
Right now, when two of the biggest companies in Memory trade has shared their Q2 earnings, they smashed them and yet the Korean market, that's where those two biggest companies live, is down like 30 percent. I think this is a great opportunity because it's not because their business is not going well, it's because there was some mechanical selling and a lot of Koreans were over-leveraged, and so that mechanical selling gives me a great opportunity to really buy these Memory stocks, Memory leaders at very good prices. Now, I'm just going to try to pitch you the thesis behind it and share my model, why I think that SK Hynix is a really good opportunity here, why I think it's going to keep growing, and what's my price target for the next year.

**LGD Set** (2:39)
Yeah. I want to get to those price targets, but I think we need the context first, man, so I'll let you take it from here.

**Martin** (2:45)
I'm pretty sure that everyone who is running his own portfolio by now know what memory is about, and that this is the hottest thing that everyone talks about. But there are two camps. One of them is that memory is still cyclical, meaning that we might have topped, and there is not going to be enough demand for memory next year. That's actually not correct because there were actually an announcement today that all the three biggest memory players on the world, which is Samsung, SK Hynix and Micron, has fully contracted their whole capacity throughout 2027 So it's really hard to argue that this is still a cyclical product when their full capacity even for the next year is fully booked. And so now it's really just a story about what's going to happen in 2028 and beyond. And so that's sort of like, you know, I want to kill all the bears, the bears that are still believing that the memory is not exciting. And I actually have a slide here that's showing what's happening on the memory market.
So when you were in this memory business in the past, you probably were operating with something like 30% profits.
So, you know, like from each $1 of your sales, you only kept like 30%.
And that was a good year. There were some years where it was close to zero or some years you were even operating at loss. So that wasn't a good business at all because you don't want to be in community business. The reason is that when it's commodity, everyone can build it and you only fight with the price. So that's obviously not something you want to do. And so we can see here that all the memory companies right now are going through a big structural change and SK Hynix as well as Samsung reported last week that their margins are around 70 percent, which is pretty good. And also, we have got some forecasts for JP Morgan that's at the memory market in 2025 was just 214 billion, but it's going to be 1.6 trillion by 2028 That's 4X over these three, four years.