Shares of SK Hynix surged 6.8% to $1,040 after the world's second-largest memory chipmaker unveiled what amounts to one of the biggest share repurchase programs in Korean corporate history, signaling management believes its stock is undervalued even after a strong run fueled by AI-driven demand. SK Hynix's $28.6 Billion Bet on Its Own Stock: Confidence Signal or a Sign That AI Memory's Best Days Need Protecting?
Shares snapped back sharply after SK Hynix, the world's dominant supplier of high-bandwidth memory chips for AI, announced the largest share buyback and cancellation in South Korean corporate history — a move designed to answer investors who punished the stock with a ~49% decline from its June peak despite record earnings.
• A $28.6 Billion Floor Under a Beaten-Down Stock
SK Hynix's board approved repurchasing up to 24.07 million common shares worth KRW 40 trillion between August 20 and November 19, 2026, with all acquired shares to be fully cancelled.
That covers roughly 3.3% of 730.5 million total issued shares. Cancellation — permanently destroying the repurchased stock — means every remaining share represents a slightly larger slice of future profits, directly boosting earnings per share. The move, described as the largest treasury-share cancellation by any listed Korean company, lifted the broader KOSPI index and even dragged rival Samsung Electronics up nearly 10% on speculation it would follow suit.
• The Cash Pile Makes This Affordable — For Now
SK Hynix ended Q2 with net cash of roughly KRW 69 trillion after cash and equivalents swelled to KRW 88 trillion, giving the company ample room.
The buyback sits comfortably within a KRW 89.4 trillion distributable profit limit. But the company also guided capital expenditure in the high-KRW 40 trillion range for 2026 to build next-generation chip capacity, meaning management is simultaneously writing two very large checks.
• Record Profits, but the Market Still Wasn't Satisfied
Q2 revenue hit a record KRW 79.3 trillion (+257% YoY) with operating profit of KRW 60.5 trillion and a 76% operating margin.
Yet results missed analyst expectations of ~KRW 84 trillion in revenue partly because some shipments of its latest AI memory chips were delayed.
Shares fell 9.6% on the earnings report , setting the stage for the buyback as a confidence-restoring measure.
• The Bigger Promise: More Cash Coming Back to Shareholders
SK Hynix raised its shareholder-return commitment for 2025–2027, moving from a ceiling of 50% of cumulative free cash flow to a floor exceeding that level.
The company said this buyback "would not be the final step" and plans additional return measures around its Q3 earnings release.
With a forward price-to-earnings ratio of only about 8×, many analysts remain bullish — but the open question is whether AI memory demand stays strong enough to keep cash generation at these extraordinary levels, or whether SK Hynix is returning capital precisely because growth is peaking.