#SKHynixADRIndicativePrice149

SK Hynix’s US listing could be the Biggest AI Market Event of the year. I’ve been tracking this story about SK Hynix’s ADRs and the demand itself tells an interesting story. An indicative price of $149 for ADR, with a $26.5 billion offering target and over 7x bookbuild based on news, signifies a clear investor appetite for significant bets in AI infrastructure.

It’s not the scale alone that is noteworthy but more about the buyers.

Typically long only asset managers, as well as sovereign wealth funds, don’t usually chase quick-win hype, and as these institutional buyers are planning many years ahead, I take this to imply their faith in the ongoing demand for AI chips and memory as more and more companies invest in data centres and model training. We know SK Hynix is currently a global leader in high-bandwidth memory (HBM), an integral element of the chip required in the operation of most AI accelerators and advanced computer systems. Companies providing the technology behind AI can become as crucial as those focused on software as we all embrace this AI trend. Another item to observe: will the ADR will carry a premium post-listing?

Most analysts expect this due to increased accessibility to US-based investors as well as the shares already trading at a premium to the Korean listing.

The sustainability of any such premium, however, will rely heavily on factors such as the companies’ ability to meet projections, their future profitability and the speed of AI investments. Needless to say that with such high expectations I wouldn’t be shocked to witness increased volatility post-listing, particularly during the first few weeks. Major initial public offerings (IPOs) usually fluctuate violently until the market finds equilibrium.

So my focus will remain on the bigger trend in the AI ecosystem, rather than a few days’ worth of trading action. All told, this IPO serve as another example for me that the AI boom not only centres on new chatbots or slick software but the chip and infrastructure companies that build the technology itself, these may continue to offer substantial long-term prospects. Will you be watchingSK Hynix once its listed on Nasdaq, or do you believe that the majority of the optimism surrounding AI is now captured in the valuation?

‍#AI #GateSquare