SK Hynix reports record second-quarter operating profit but fails to lift semiconductor stocks as AI trade unwinds.
Semiconductor stocks fell significantly on Wednesday as a record second-quarter operating profit from South Korean memory maker SK Hynix failed to lift the broader sector. The PHLX Semiconductor Index dropped more than 5%, with AI chip heavyweights Nvidia and AMD seeing losses of over 3% and 5% respectively. SK Hynix reported a 557% year-over-year increase in operating profit, yet the results fell short of lofty investor expectations. While demand for AI memory chips remains strong, the earnings miss fueled concerns regarding the sustainability of rapid AI-related spending. The company also announced plans to increase 2026 capital spending by 50% to at least $31 billion to ramp up production. Analysts from Barclays and Susquehanna have lowered their price targets for SK Hynix. The decline comes as investors question whether massive investments by hyperscalers will generate sufficient returns, while a hawkish interest rate hold from the Federal Reserve also weighed on market sentiment.