Nvidia, Micron, AMD Fall as SK Hynix Results Fail to Lift AI Chip Stocks
Key Takeaways
- •The PHLX Semiconductor Index fell more than 3% as chip stocks extended losses from the prior session.
- •SK Hynix reported a record second-quarter operating profit that was 557% higher than a year earlier, but it still missed market expectations.
- •SK Hynix said demand for AI memory is expected to outpace supply through 2030 and plans to lift 2026 capital spending by about 50% to at least $31 billion.
- •Barclays cut its price target on SK Hynix’s US-listed shares to $300 from $330 while keeping an Overweight rating, and Susquehanna also lowered its target on the Korean shares.
- •Investors are watching upcoming spending and earnings updates from Microsoft, Amazon and Meta for signs that AI infrastructure outlays will continue to rise.
Semiconductor stocks declined on Wednesday as a record profit from memory maker SK Hynix (000660.KS, SKHY) failed to lift the sector, deepening the unwinding of the AI trade.
The PHLX Semiconductor Index (^SOX) fell more than 3%, extending losses from the previous session. AI chip heavyweight Nvidia (NVDA) dropped more than 2%, while AMD (AMD) fell roughly 5%. Memory and storage makers Micron (MU) and Sandisk (SNDK) fell 5% and 7%, respectively.
SK Hynix reported a record second-quarter operating profit that rose 557% from a year earlier, but the result still fell short of lofty expectations, adding to investor concern about whether AI-related spending can sustain its recent pace.
The earnings miss reflected a less favorable product mix rather than weakening demand for AI memory chips. Management reiterated that demand is expected to outpace supply through 2030, underscoring that the immediate question for investors is not whether AI memory demand exists, but whether the industry can scale production without creating excess capacity.
The South Korean memory maker also said it plans to raise 2026 capital spending by about 50% to at least $31 billion as it expands AI memory production, a move that raised fresh concerns about potential overinvestment in AI infrastructure.
Barclays analysts cut their price target on the US-listed stock to $300 from $330 after the results, while maintaining an Overweight rating. Susquehanna analysts also lowered their price target on the South Korean shares.
The latest decline came after SK Hynix fell more than 8% in the previous session amid concerns over rising competition, AI-related financing deals in the chip sector, and whether hyperscalers' massive AI investments will generate sufficient returns.
In Asia, investors again sold chip stocks including Samsung (005930.KS) and SK Hynix, sending the KOSPI Composite (^KS11) down nearly 6% on Wednesday.
A strong debut from Chinese memory maker CXMT (688825.SS) in Shanghai this week also reignited concerns that expanding memory supply could pressure chip prices.
Semiconductor stocks have been at the center of the artificial intelligence trade this year, helping push the sector to record highs in June. Since then, chip shares have fallen sharply as investors question whether hyperscalers' enormous AI spending plans will translate into adequate returns, making upcoming capex updates and earnings from the biggest cloud companies closely watched by traders in the sector.
Last week, Alphabet (GOOG, GOOGL) stock dropped after the company said it would raise its capital spending outlook as it builds out its AI infrastructure.
Investors are now focused on upcoming results from Microsoft (MSFT), Amazon (AMZN), and Meta (META), all of which are expected to announce further increases in AI-related spending. Any sign of a slowdown would weigh on companies that make semiconductors and related equipment.
Concerns that the Federal Reserve could resume raising interest rates have also weighed on sentiment.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.