Where Jim Cramer stands on SK Hynix’s massive offering
CNBC’s Jim Cramer said on Thursday: SK Hynix The upcoming Nasdaq launch will offer US investors a new way to bet on the AI boom, but the South Korean memory chip giant has warned it carries significant risks.
“We know the memory chip business is on fire, and if you’re willing to accept volatility, I think you could do a lot worse than this,” the “Mad Money” host said. “If you really want to, take a small position and leave room to buy more towards weakness.”
SK Hynix will begin trading on Nasdaq on Friday through American depository receipts, or ADRs, which allow U.S. investors to more easily own shares of companies traded on foreign exchanges. approximately $26.5 billion bid It is expected to be among the largest ever, following major deals such as. brains And SpaceX In the past months.
SK Hynix’s South Korean-listed shares have risen nearly 2,550% since ChatGPT’s launch in November 2022, pushing its market capitalization to over $1 trillion. Despite those gains, Cramer said the stock still looks cheap, trading at seven times this year’s earnings.
“Memory chips may sell at a huge premium, but stocks are trading at a discount,” he said.
Cramer noted that the bull case is based on expectations that AI spending will continue to drive massive demand for memory chips. But on the other hand, Cramer said, “The big concern historically is that memory chips have been a boom-and-bust business, so when supply eventually catches up with demand, you don’t want to be left holding the bag.”
Recent transactions underscore this volatility. SK Hynix shares have fallen nearly 25% from their June 25 peak, joining a broader selloff in memory stocks that has hit Korean tech giant Samsung and Idaho-based Micron despite strong earnings reports.
“Fortunately, that means you’re not going to hit the top of this stock. But this thing is a roller coaster that can drop quickly,” Cramer said.
For investors considering SK Hynix, Cramer said the opportunity ultimately depends on whether AI permanently transforms the checkered memory business. However, it is difficult to answer this nowadays.
“Again, historically every memory chip explosion has led to a memory chip explosion.”
