Memory Stocks Surge 500% Yet Trade at 7x P/E
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- SK Hynix soared more than 500% over the past year and just raised $26.5 billion selling U.S.-listed depositary shares that investors "were clambering to get access to," with the stock soaring on its U.S. trading debut Friday before tumbling overnight in Seoul.
- Despite that 500% rally, SK Hynix trades at a price-to-earnings multiple of just 7 — a strikingly cheap valuation for one of the year's top-performing stocks.
- Sandisk and Micron Technology, the two biggest blue-chip gainers in the S&P 500's first half of 2026, also carry P/E ratios in the index's lowest 20%.
- Bernstein Research analyst Mark Newman says the low multiples reflect the market essentially "pricing an imminent collapse in profits," but argues AI data-center demand differs from past cycles because, unlike price-sensitive smartphone makers, data centers "can't possibly have enough" of memory.
- D.A. Davidson analyst Gil Luria argues investors underprice how fundamentally AI has transformed the memory business: "Memory is how AI happens. The GPU can't do an AI transaction without memory."
- The sector's low valuations reflect its long-standing reputation as highly cyclical — past memory downturns caused bankruptcies that wiped out investors.
Why it matters: The $26.5 billion SK Hynix raise gives the market a fresh stress test: if AI data-center demand truly differs from past memory cycles, SK Hynix at 7x earnings is drastically mispriced upward; if the cycle turns, the 500% rally evaporates. As Luria puts it, memory is now "how AI happens" — making this valuation gap the market's core bet on whether AI structural demand can override decades of boom-bust history.
