According to the Futu Securities APP, Morgan Stanley analyst raised SK Hynix's target price by 8% to 0.13 million South Korean won, while still maintaining a "shareholding" rating. About six weeks ago, Morgan Stanley downgraded SK Hynix's rating. Prior to the downgrade, Morgan Stanley sold shares of the chip manufacturer, which was scrutinized by South Korean market regulators.

Morgan Stanley analysts, including Shawn Kim and Duan Liu, said on Thursday: "Our short-term assessment of Hynix stock was wrong, but our assessment of the memory cycle peak was not." Following SK Hynix's record quarterly performance, Morgan Stanley analysts, like others, raised the stock's target price, but still maintained a shareholding rating.

The rapid target price changes indicate that analysts are being forced to swiftly change their views on the ai industry. Of note, South Korean regulators closely monitored Morgan Stanley's Seoul office's instruction to sell SK Hynix in September, which was issued two days before the downgrade.

Morgan Stanley analysts said: "We expect 2024 to be another brilliant year for SK Hynix, with the recent strong performance driven by the uptrend in DRAM prices in the fourth quarter (albeit at a slower pace), SK Hynix's recent profits will be outstanding."

Data shows that SK Hynix's operating profit in the third quarter reached 7.03 trillion South Korean won (5.1 billion U.S. dollars), compared to a loss of 1.8 trillion South Korean won in the same period last year, exceeding analysts' expectations of 6.9 trillion South Korean won. Sales surged by 94% to reach 17.6 trillion South Korean won, while the market was expecting 18.2 trillion South Korean won.

Goldman Sachs Group and Yu Guang Securities and other institutions raised their target price for SK Hynix after the financial report was released.

SK Hynix's stock price rose by 3.9% in Seoul on Friday. Due to concerns about the sustainability of artificial intelligence development, SK Hynix's stocks fell together with other AI stocks this summer, but have still risen by over 40% year-to-date.

SK Hynix's record quarterly profit and revenue announced on Thursday reflect the strong demand for its memory chips in the market. The financial report also indicates that SK Hynix is expanding its leading edge over competitors like Samsung Electronics and Micron Technology in providing advanced high-bandwidth memory (HBM) for Nvidia's AI accelerators.

"Clouds are gathering."

Despite Morgan Stanley analysts raising SK Hynix's target price to 0.13 million Korean won, it remains the lowest target price among analysts tracking this chip manufacturer.

Morgan Stanley analysts state that a 'storm is brewing' for SK Hynix starting this quarter, adding that among the industry companies they research, this stock is the 'least bullish'. They suggest that the cyclical shortage is coming to an end, and the company's revenue and earnings face 'ongoing risks' with slowing growth and falling prices.

In contrast, HSBC analyst Ricky Seo believes that due to SK Hynix's leading position in the HBM market, the stock remains a 'preferred stock' for HSBC.

Last month, the Financial Supervisory Service of South Korea demanded Morgan Stanley to provide relevant documents regarding the sale of SK Hynix stocks on September 13. The regulatory body stated that they are investigating whether the American company complied with regulations prohibiting financial product issuers from trading their analyzed products within 24 hours.

Chip stocks have rebounded from recent lows, buoyed by the strong financial report from Taiwan Semiconductor (TSM.US).