SEOUL: A top-performing technology fund plans to own SK Hynix Inc’s shares, betting that tighter supply will further benefit the South Korean artificial intelligence (AI) memory chipmaker after a 1,000% rally in the past year.
Richard Clode, a co-manager of Janus Henderson Investors’ Global Technology Leaders Fund, said SK Hynix’s dominance in the global high-bandwidth memory chip market means it may enjoy “a bit more outsized earnings growth” next year, when multi-year supply contracts will likely be repriced at elevated levels.
The US$8.3bil fund, which has beaten 96% of its peers this year, has delivered a return of 36% over the past three years. It currently holds US memory chip producers Micron Technology Inc and Sandisk Corp.
“The shortages this year, most people now think, are going to get worse next year,” Clode said. “That’s why the customers are so willing to sign these contracts on what you think are fairly draconian terms.”
Bullish investors argue that the rise of harder-to-produce, advanced memory chips made by firms including SK Hynix is changing the industry’s cyclical nature, making the supply-and-demand picture more favourable in the long run.
Sitting at the chokepoint of the world’s AI infrastructure, SK Hynix and rivals Micron and Samsung Electronics Co now each has a market capitalisation above US$1 trillion.
In the fourth quarter of 2025, SK Hynix accounted for 57% of the global high-bandwidth memory chip market’s total revenue, according to Counterpoint Research. Samsung Electronics Co and Micron each had a share of 22% and 21%, respectively.
After suffering what Clode called “generationally bad losses” as recently as 2023, chipmakers cut capital expenditure and deferred construction of new plants – decisions that typically take two to three years to reverse.
The supply shortages are pushing large cloud service providers known as hyperscalers into unusually aggressive long-term agreements, he said.
The memory chip stocks’ persistently cheap valuations make them unusually easy to hold, Clode said.
In a supply shortage this acute, he said, picking winners matters less than simply having allocation.
Thanks to their surging profits, these memory chipmakers’ stock valuations have stayed attractive despite the rally.
Micron trades at roughly 10 times forward earnings, with SK Hynix and Samsung both at around seven times – a steep discount to the Philadelphia Semiconductor Index’s 27 times.
Still, Clode said he prefers pure-play memory chip names over Samsung, whose consumer electronics business is squeezed by rising costs and weakening its earnings.
“These stocks have been getting cheaper as they go up, just given the ridiculous earnings power that they’re seeing,” Clode said. “It’s very easy to stick with them.” — Bloomberg
