Jumping into the AI fire - Buy Hynix here (@W1.3M)

I was posting I would top up the Hynix/Samsung a few weeks ago, when they were down 20% from the peak.

Now, Hynix is down over 50% from the recent peak. See Pic 1.

News articles now flying about margin accounts being liquidated in Korea.

Yesterday, Hynix reported. Missed earnings a bit... Apparently, ASP increased "only" 30% qoq as Hynix shifted more of its output to HBM (whose price lagged the hike in other DRAM chips in Q2).

Normally, don't buy cyclicals at low PE i.e. peak of the cycle.... BUT my gut feelin is 50% draw down before the cycle even peaks is front running a lot of bad news.

Now that Samsung and Hynix both reported.... Cycle is not going to be over in the next 3 months. 2H 26 should be better as HBM4 ramps (much better ASP than HBM3). In fact, 2027 is expected to be S&D constrained as well.

Also noticeable both Samsung and Hynix are signing long term supply agreements. Samsung went as far as to say in time these LTA could account for 60-70% of capacity. See Pic 3.

Also remarkable that how much cash it is generating. See Pic 4. W70trn in a year. Went from net debt to net cash.

It reminds of the auto semi S&D gap a few years ago..... All great until S& demand loosened... And customers hoarded inventories.... Lo and behold, the analog semi makers had a downturn that was much longer than previous downturn....Took like one or two years of bouncing along the bottom until the AI cycle came along.

BUT for now, after a 50% chop, would buy Hynix here. The stock is on 4X PE in 26 and 3X 27. 1.3X book in 2027.

What is not anticipated is given how much cash it is throwing off, it can buy back a lot of stocks.

Market/stock is front running the downturn before there is even smoke....

Play for a bounce to be closer to the high then figure out the next step.

Interactive brokers can buy Korean stocks. More recently, Hynix has its ADR in USA.

PS... Do your own research. Not financial advice.