KIS cuts Hynix’s two-year operating profit forecast, maintains the target price unchanged

BlockBeats message: On July 13, according to market sources, Korea Investment Securities lowered its operating profit forecasts for SK hynix for 2026 and 2027, with the declines of 9% and 11%, respectively. The firm still maintains a target price of 3.8 million Korean won, indicating that the adjustment is not due to weakening demand, but rather to a重新 estimate of long-term supply contract prices.

HBM demand remains strong, especially as AI server and GPU supply chains continue to expand. KIS expects SK hynix’s second-quarter revenue to be about 80.9 trillion Korean won and operating profit to be about 60.4 trillion Korean won. Based on this set of figures, the operating margin is close to 75%, still at a historical high.

KIS’s analysis shows that the issue is not that SK hynix may not be making money, but that it might not make as much as the market previously imagined.

KIS expects that over the next three to five years, the trading structure in the storage industry will be more centered on long-term supply contracts. Long-term agreements can lock in customers, capacity, and cash flow, but they also typically reduce manufacturers’ ability to capture spot price increases. When DRAM or HBM spot prices rise temporarily, long-term contract pricing will smooth out profit margins and limit the space for further upward revisions to earnings forecasts.

For investors, SK hynix’s narrative is shifting from “AI memory scarcity” to “how scarcity is being priced.” Large-scale shipments of HBM4 may still push up the average product price, but long-term contracts mean that this round of gains won’t be fully reflected on the income statement purely in the form of spot prices.

KIS’s maintained target price indicates it has not changed its view of SK hynix’s medium- to long-term trend. This adjustment looks more like a cooling of valuation assumptions rather than a negation of the fundamentals. In the short term, the stock price may be hit by headlines about “earnings downgrades,” but the more substantive question is: once long-term contracts become the industry’s main framework, how much premium investors are willing to pay for SK hynix’s certainty.