Nividia Supplier SK Hynix Shares Drop To Lowest Level Since February In Seoul After Morgan Stanley Downgrade: 'Memory Conditions Are Beginning To Deteriorate'

NVIDIA Corp‘s NVDA key supplier for high-bandwidth memory chips SK Hynix HXSCF declined over 6% on the South Korean exchange after Morgan Stanley downgraded the Korean memory chipmaker to underweight from overweight.

What Happened: Morgan Stanley in a brokerage note slashed SK Hynix’s target price to 120,000 won from 260,000 won, citing the least preference for the stock among global memory makers, reported Bloomberg on Thursday.

"We prefer moving up to quality in Samsung and value-oriented end markets," wrote analysts Shawn Kim and Duan Liu. "Memory conditions are beginning to deteriorate. It will get tougher for revenue growth and margins from here as we move past late-cycle conditions."

The stock hit its lowest level since Feb. 19 after falling as much as 10%. Meanwhile, Samsung Electronics Co SSNLF saw a 3.1% decline among other semiconductor shares traded in Seoul.

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Why It Matters: In July, Goldman Sachs Group Inc. increased SK Hynix’s stock-price target to 290,000 won ($210), indicating a potential gain of 25%. Meanwhile, Citigroup Inc. raised its prediction to 350,000 won during the same period.

SK Hynix's parent company, SK Group, pledged to invest 80 trillion won ($56 billion) by 2026 in artificial intelligence and semiconductors, primarily in high-bandwidth memory chips, data centers, and personalized AI assistant services. This move is expected to strengthen its supply chains for emerging technology and bolster its position as a leading supplier to Nvidia.

The ongoing AI boom has put two South Korean chipmakers, Samsung and SK Hynix, in the spotlight. Industry experts are now discussing which company is the better investment in this AI-driven market.

Price Action: SK Hynix is currently trading at 151,800 won, with a decline of 6.76% on Thursday. The stock has gained 6.60% year-to-date, according to data from Benzinga Pro.

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Image via SK Hynix