SEOUL, July 15 (AJP) -Shares of SK hynix zoomed higher at the opening bell in Seoul on Wednesday, recovering from this week's earnings and valuation-driven selloff after a bullish report from Barclays reignited optimism over the AI memory cycle.
As of 9:30 a.m., shares of the Korean chipmaker were up 12 percent at 2,139,000 won, extending an overnight 27.3 percent rally in its Nasdaq-listed American depositary receipts (ADRs) and Tuesday's gain of more than 3 percent in Seoul.
The rebound followed Barclays' initiation of coverage on SK hynix's newly listed ADRs with an Overweight rating and a $330 price target, implying about 70 percent upside from Tuesday's close.
Analyst Simon Coles said the memory industry was entering a prolonged supply shortage as artificial intelligence investment continued to outpace supply growth, allowing SK hynix to maintain strong pricing power over the next several years.
Barclays expects supply shortages to deepen through 2027 and remain tight into 2028, arguing that the market continues to underestimate both high-bandwidth memory pricing and SK hynix's earnings potential.
The bank also said SK hynix could hold cash equivalent to more than 40 percent of its current market capitalization by the end of 2027, providing ample room for additional share buybacks that could further lift earnings per share.
It dismissed concerns over China's memory industry as a near-term threat, saying Chinese DRAM would have only a limited impact on the global market unless major cloud service providers begin deploying it in AI data centers.
The report helped lift sentiment after SK hynix shares came under pressure earlier this week on concerns that the stock had run ahead of fundamentals following its record ADR listing and the broader correction in AI-related semiconductor shares.
The optimism was reflected even more strongly in New York, where SK hynix's ADRs continued to trade at a hefty premium over the Seoul-listed shares.
The ADR closed at $193.92 overnight after surging 27.3 percent, putting it at roughly a 45 percent premium to the equivalent value of the common shares in Seoul. The gap has widened sharply from about 3 percent when the ADRs were priced at $149 last Friday.
Analysts attributed the unusually large premium to limited arbitrage opportunities, as the ADRs cannot be freely converted into Korean-listed shares, allowing strong U.S. demand to drive prices higher.
The premium has also been supported by the launch of options trading on the ADRs, opening the stock to a broader pool of institutional investors and hedge funds in the world's largest derivatives market.
The Nasdaq debut has also sparked strong interest among Korean retail investors.
According to brokerage industry data, about 84,000 Korean investors bought roughly 1.36 million ADRs worth 338.9 billion won ($245 million) through nine major domestic brokerages on the July 10 listing day alone. Including other brokerages, the number of investors is estimated to have approached 100,000, with holdings exceeding 400 billion won.
Retail investors also continued buying SK hynix shares in Seoul, betting the U.S. listing would support a higher global valuation despite recent volatility.
SK hynix raised $26.5 billion through its ADR offering, making it the second-largest equity issuance in U.S. market history after SpaceX and the largest ever by a foreign company.
The strong recovery in both Seoul and New York suggested investors remain convinced that the AI-driven memory upcycle has further room to run despite recent concerns over valuations.
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