SK Hynix Q1 2026 Earnings Far Exceed Expectations, Net Profit Surges 500% YoY
Performance far exceeded market expectations! SK Hynix’s net profit in the first quarter of fiscal year 2026 reached 40 trillion won, with a year-on-year increase of as high as 500%. Along with the continuous surge in storage market prices, the company’s revenue, operating profit and net profit all set new single-quarter historical records, fully confirming that the tight supply-demand pattern in the high-performance memory market is still deepening.
SK Hynix achieved a comprehensive breakthrough in revenue and profit this quarter. Among them, the first-quarter revenue reached 52.58 trillion won, a sequential increase of 160% and a year-on-year increase of 298%; the operating profit was37.61 trillion won, a sequential surge of 196% and a year-on-year jump of 505%, corresponding to an operating profit margin of 72%, setting a new single-quarter historical high.
Specifically, the company’s net profit in the first quarter was 40.35 trillion won, with a net profit margin of 77%. It is worth noting that SK Hynix recorded an investment asset valuation gain of 10 trillion won (approximately 6.76 billion US dollars) in the first quarter alone, which mainly came from its holdings of Kioxia-related shares.
The core drivers of this sharp performance jump mainly come from the significant increase in DRAM and NAND product prices and the continuous improvement in the proportion of high-value-added product portfolios. SK Hynix stated that as the strategic demand for memory in the AI computing field becomes increasingly prominent, the current supply of high-performance storage is still limited, and the favorable pricing environment is expected to continue for a period of time.
Looking ahead to the second quarter of fiscal year 2026, SK Hynix gave clear guidance: DRAM shipments are expected to increase by a high single-digit percentage sequentially, and NAND shipments (including Solidigm) are expected to increase by a mid-teen percentage sequentially. At the same time, the company announced that its capital expenditure this year will increase significantly compared with the previous year, and it plans to formulate additional shareholder return plans including dividends, share repurchases and cancellations within the year.
Revenue and Profit Hit New Highs, Driven by Both Prices and Product Structure
SK Hynix’s revenue this quarter reached 52.58 trillion won, nearly three times the 17.64 trillion won in the first quarter of 2025. The sharp increase in revenue mainly comes from two core factors: first, the significant increase in DRAM and NAND memory product prices; second, the continuous improvement in the proportion of high-value-added products in the overall product structure.
From the perspective of specific products, DRAM shipments (B/G) remained flat sequentially, but the average selling price (ASP) increased by more than 60% sequentially; NAND shipments decreased by about 10% sequentially, but the average selling price (ASP) increased by more than 70% sequentially. The continuous improvement in the structure of high-value products has become a key factor driving the company’s gross profit margin to jump from about 57% in the same period last year to 79% this quarter.
In terms of cost control, the company’s selling and administrative expenses this quarter were 4.07 trillion won, and the cost of goods sold was 10.90 trillion won, an increase of only 6% sequentially, far lower than the 60% sequential growth rate of revenue, thus forming a significant operating leverage effect, further pushing the operating profit margin to a historical peak of 72%.
It is worth noting that the net profit this quarter was further expanded compared with the operating profit, largely due to the contribution of non-operating income. Among them, the rise in the exchange rate brought a net foreign exchange gain of 1.57 trillion won, and other non-operating profits including investment asset valuation gains of 9.94 trillion won totaled 12.44 trillion won.
Market Outlook: AI Models from Training to Inference Will Continue to Boost Memory Demand
Regarding the subsequent market prospects, SK Hynix holds a cautiously optimistic attitude.
The company stated that as AI technology continues to evolve from the model training stage to the inference and Agentic AI stages, the amount of data generated by AI agents is constantly increasing, the total demand base for DRAM and NAND memory is gradually expanding, and the tight supply-demand pattern of high-performance memory is expected to maintain for a certain period of time.
At the same time, SK Hynix also admitted that there are signs of partial differentiation on the demand side: affected by the cost pressure brought by higher memory prices, shipments of consumer products have adjusted, and some product combinations have also changed accordingly.
However, the company judges that the strong demand for server memory is sufficient to offset the weakness on the consumer side and continue to drive the growth of the overall storage market.
In terms of guidance for the second quarter of fiscal year 2026, SK Hynix clearly expects that DRAM shipments will increase by a high single-digit percentage sequentially, and NAND shipments (including Solidigm) are expected to increase by a mid-teen percentage sequentially.
Technology Roadmap and Capital Expenditure: Betting on the Long Cycle of AI Infrastructure
In terms of product technology layout, SK Hynix stated that it is currently working closely with core customers to promote the development of HBM4 products, and plans to advance mass production ramp-up in accordance with the agreed schedule.
At the same time, the company has completed the development of the industry’s first 1cnm LPDDR6 product, and plans to officially launch large-scale supply in the second half of 2026 with the next-generation flagship model of a major smartphone customer.
In addition, SK Hynix has launched the mass production of 1cnm 192GB SOCAMM2 products optimized for NVIDIA’s Vera Rubin platform, and in the enterprise solid-state drive (eSSD) field, it has laid out a balanced product line covering high-performance TLC and high-capacity QLC to meet market demand in different scenarios.
In terms of capital expenditure, SK Hynix expects its capital expenditure this fiscal year to increase significantly compared with the previous year, with funds mainly used for infrastructure construction centered on the Yongin Cluster, M15X production line ramp-up and key production equipment procurement. The company positions this capital expenditure as a strategic capacity layout to proactively respond to medium and long-term demand growth and lay the foundation for future development.
It is reported that last month, SK Hynix further announced plans to invest about 8 billion US dollars to purchase the most advanced extreme ultraviolet lithography (EUV) chip manufacturing equipment from ASML, continuing to strengthen its technological advantages.
Stock Price Leads Strongly, Valuation Still Far Lower Than Top AI Enterprises
The capital market has responded positively to SK Hynix’s AI-related business narrative. After the stock price more than tripled in 2025, the cumulative increase of the stock so far in 2026 has been close to 90%, significantly outperforming its industry peer Samsung Electronics.
However, it should be noted that the current valuation multiples of memory chip sector stocks are still far lower than those of top AI chip companies such as NVIDIA and TSMC.
Market skeptics believe that this valuation discount is reasonable—the cyclical fluctuation characteristics of memory industry profits cannot be ignored, and a short-term performance boom does not mean the disappearance of industry cyclicality.
Jorry Noeddekaer, Head of Global Emerging Markets and Asia at London-based Polar Capital, said before the release of SK Hynix’s results: "To a certain extent, we are in a new paradigm in the memory industry. But we do not agree with the statement that 'memory will never bid farewell to cyclicality'."
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