SK Hynix postQ: Profit beat offsets revenue miss

SK hynix Inc. (KRX: 000660) reported strong Q2 2026 results on July 29, achieving a massive surge in revenue and operating profit driven by strong AI infrastructure demand. The results, however, slightly missed high market expectations, with weaker-than-expected memory revenue being offset by significantly stronger profitability and cash generation. 

Revenue came in slightly below Visible Alpha consensus expectations as softer-than-expected DRAM performance outweighed strength in NAND. However, net income, earnings per share and free cash flow substantially exceeded expectations, reflecting favourable non-operating items and continued cash generation despite ongoing investment in production capacity.

Management also reinforced confidence in the AI memory cycle, maintaining a constructive outlook for HBM demand, raising its capital spending plans and signaling continued investment in next-generation memory technologies to support long-term customer commitments.

Looking at earnings summaries compiled by S&P Global Pronto NLP, together with Visible Alpha pre-quarter consensus expectations and revised outlook, here are the key takeaways.

Key takeaways

Q2 revenue narrowly missed consensus as DRAM came in below high expectations. Revenue was KRW 79.3 trillion, up 256.8% year-over-year, but 0.8% below Visible Alpha consensus. The shortfall was concentrated in DRAM, where revenue rose 240.4% year-over-year to KRW 58.3 trillion but missed consensus expectations by 6.8%, reflecting softer than expected conventional DRAM shipment and pricing.

HBM revenue of KRW 9.4 trillion was broadly in line with expectations, supported by stronger pricing. Conventional DRAM revenue missed consensus by 9.7%. NAND was the strongest-performing segment, with revenue climbing 344% year-over-year to KRW 21 trillion, beating consensus expectations by 3.2% as higher-than-expected average selling prices more than offset slightly weaker bit shipments.

Pricing remained the key earnings driver. NAND average selling prices exceeded expectations by 6.2%, while HBM pricing also outperformed consensus by 6.1%. Overall DRAM bit shipments were broadly in line with expectations, although HBM shipments fell 7.4% short of consensus. Conventional DRAM shipments modestly exceeded forecasts.

Profitability comfortably exceeded expectations. Despite the modest revenue miss, SK Hynix delivered strong earnings beat. Net income surged 1,242.5% year-over-year to KRW 93.9 trillion, nearly doubling consensus estimates. EPS excluding treasury shares exceeded expectations by 80.3%, while free cash flow reached KRW 77.4 trillion, more than twice analyst forecasts.

Guidance 

Management expects Q3 2026 DRAM bit shipments to increase by approximately 10% quarter-over-quarter, while NAND bit shipments are expected to grow by a low single-digit percentage sequentially.

For full-year 2026, the company continues to expect industry DRAM demand to grow in the mid-20% range and NAND demand in the high-teen percentage range.

Management raised its 2026 capital expenditure guidance to the high-KRW 40 trillion range, reflecting accelerated investment in advanced memory capacity.

The company also expects 321-layer NAND to account for roughly 50% of domestic production capacity by the end of 2026 as it continues migrating to more advanced process technologies.

Consensus revisions

Analysts have adopted a more cautious stance on the near-term revenue outlook following the results, particularly for DRAM, while becoming increasingly constructive on the full year profitability.

For Q3 2026, Visible Alpha consensus now shows:

• Revenue expectations of KRW 102.9 trillion, 2.1% below preQ expectations, driven primarily by a 1.3% cut in DRAM revenue forecasts.
• HBM revenue estimates have been raised by 6.2%, reflecting continued confidence in AI-related demand.
• NAND revenue expectations are up 2.7%.
• Shipment assumptions for conventional DRAM have also improved, although pricing expectations have been revised lower.

For full year 2026:

• Consensus revenue estimates have edged 0.7% higher to KRW 348.6 trillion.
• Analysts have reduced DRAM revenue forecasts by 2.3%, but lifted NAND expectations.
• Capital expenditure estimates have been raised by 20.1%, reflecting continued investment in advanced manufacturing capacity.
• Net income estimates are up 12.8%, EPS up 6.8% and free cash flow 28%, indicating growing confidence that SK Hynix can sustain strong earnings and cash generation through a richer product mix.

Share price reaction 

SK Hynix shares fell after earnings despite record profits, driven by the revenue miss relative to expectations and concerns around cyclical oversupply risk alongside higher capital expenditure plans. Although the stock has since seen a partial recovery.

This article was published by Visible Alpha, part of S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.