SK Hynix's flash memory unit Solidigm has selected Goldman Sachs Group Inc. and Morgan Stanley as lead banks for its potential $10 billion US IPO next year, according to people familiar with the matter. The South Korean firm's flash memory unit has also tapped JPMorgan Chase & Co., Citigroup Inc. and UBS Group AG for the offering, with a listing potentially taking place as soon as 2027 and valuing the company at as much as $100 billion. A spokesperson for SK Hynix confirmed that its subsidiary Solidigm is reviewing various options to strengthen its business competitiveness, though no specific plans have been confirmed at this time. The second-largest memory firm's American depositary receipts fell 1.4% on Thursday, marking its fourth day of declines despite the IPO plans.
Semiconductor stocks experienced a sharp decline at market open, with Micron opening down 3.25% to $1,011.61, SK Hynix declining 2.18% to $178.59, SanDisk Corp. opening 1.26% lower to $1,639.57, Advanced Micro Devices (AMD) down 0.91% to $643.50, and Nvidia starting the session at a 0.67% decline to $237.65. According to latest reports, Intel bucked the wider trend, trading higher at an uptick of 1.51% to $114.20 after the opening bell. The decline comes amid rising 10-Year bond yields climbing eight basis points to 5.356%, which reached their highest level in 24 years, and 30-year bond yields up eight basis points to 5.725%, their highest level since May 2002. West Texas Intermediate (WTI) futures were trading at an uptick of 1.69% to $90.95 per barrel, while Brent crude oil futures were up 1.86% at $102.45 per barrel.
SK Hynix's second-quarter results showed exponential growth but fell short of analyst expectations, with revenue rising 257% year-over-year and 51% sequentially to 79.32 trillion won ($64.64 billion) and operating profit surging 557% to 60.54 trillion won. However, Wall Street analysts had modeled 84 trillion won in revenue and 64 trillion won in operating profit, according to estimates from LSEG. The results prompted some analysts to question whether forecasts had become overly optimistic, with Patrick Moorhead, Chief Analyst at Moor Insights, stating "Estimates are BS when you are in mega growth. Execution is so very difficult."
Retail sentiment has turned sharply bearish across memory stocks, with 'extremely bullish' sentiment for SNDK and SKHY, 'neutral' for MU, 'bearish' for WDC, and 'extremely bearish' for DRAM on Stocktwits. This represents a significant shift from the previous 'extremely bullish' sentiment for SNDK and SKHY. Micron is down nearly 35% from its record high, while SanDisk and Western Digital are down 53.4% and 42.5% respectively. The selloff reflects growing investor concerns about whether memory demand can remain elevated as AI models become more efficient, and whether the sector's blistering stock rally is nearing a cooldown. Other factors affecting the decline include investor caution with regards to the cyclical peak in memory pricing, with prominent investors such as Ray Dalio predicting that the AI industry is nearing a 'classic bubble' which is close to bursting due to climbing interest rates and the need for liquidity.
The semiconductor weakness contributed to a broader market decline, with the Nasdaq Composite dropping 0.54% to 27,451.32, S&P 500 declining 0.40% to 7,787.71, and Dow Jones Industrial Average trading 0.67% or 347 points lower at 51,173.8 at 7 pm IST. According to NDTV Profit, this development comes two days after the Nasdaq had closed with a fresh high in the previous day's trade up 1.05% to 27,544.07. The positive momentum from the previous session, where the S&P 500 rose 36.53 points (0.47%) to 7,810.48 and the Nasdaq Composite advanced 151.35 points (0.55%) to 27,628.662, was overshadowed by the current market conditions. A tech rotation is already underway, with investors appearing to sell off chip and chip-adjacent stocks that ran sharply in the past year and putting money back in Big Tech and software companies.
