BofA says this memory stock could double. Here are 5 reasons why

Investing.com -- Bank of America has resumed coverage of SK Hynix (NASDAQ: SKHY) with a Buy rating and a price target of W3,000,000 on the locally listed shares, arguing that the Korean chipmaker's dominance in high-bandwidth memory positions it for an operating profit super-cycle that Wall Street has yet to fully price in.

SK Hynix trades publicly in Korea under its local listing and via an ADR, both of which are now covered by BofA. Investors in the ADR, which BofA simultaneously initiates at a price target of $250, get direct exposure to what the bank views as the most strategically placed memory chipmaker in the global AI infrastructure buildout.

BofA's core argument rests on a combination of record-breaking recent results and an above-consensus outlook for the back half of 2026. The company posted quarterly sales of W79tn in the second quarter of 2026, a gain of 51% quarter-on-quarter and 257% year-on-year, with an operating profit margin of 76%.

DRAM margins reached 81% and NAND hit 65%, both described by BofA as record highs. Those figures are already behind us; what BofA is betting on is that the next several quarters look even better.

"We still expect DRAM ASP to rise more than consensus in 3Q (+25% QoQ) and 4Q (+9%)," BofA wrote, laying out a pricing trajectory well ahead of the street.

The bank projects quarterly operating profit will reach W81tn in the third quarter of 2026 and climb above W90tn in the fourth quarter, putting the annualized run-rate above W300tn by the time 2026 closes out. BofA expects that run-rate to hold through 2028, underpinned by an 80%-plus DRAM operating margin.

The structural driver, in BofA's framing, is sustained hyperscaler investment. "US Big Tech will keep increasing capex not only in 2027 but also in 2028, to US$1.0tn+ pa, using more advanced memory chips," the bank's analysts wrote. BofA explicitly dismisses the risk of near-term capex cuts, calling it "too early to expect AI data-center capex cuts" even given potential debt-financing pressures on the large technology platforms.

The bank expects the company to hold more than 40% market share in both high-bandwidth memory (HBM) and QLC NAND-based enterprise SSDs through 2028. On the two most-cited competitive risks, BofA is measured but not alarmed.

Samsung Electronics' HBM share is forecast to remain in the 30-40% range despite its own capex ramp, leaving Hynix's leadership intact. Chinese memory chipmakers, meanwhile, are expected to supply less than 10% of the 2028 global addressable market, limiting their pricing impact.

Valuation is where BofA makes its most direct case to investors. The stock currently trades at roughly 4x BofA's 2027-28 earnings estimates, a level the bank characterizes as historically low for a company at this stage of a memory cycle. BofA's W3mn price target is set at 8x the same earnings base, which the bank describes as the midpoint between the 4-5x peak multiple seen during the 2017-18 cloud boom and the low-teens long-run historical average.

That 8x target is also, BofA notes, slightly below its assessed fair multiple range of 9-11x for global DRAM peers, leaving room for further upside if the cycle plays out as forecast.

The ADR target of $250 carries a 20% premium to the local share target, which BofA says reflects both the premium observed since the ADR's listing and is consistent with Micron's own premium to Hynix's local-share multiple on a 2027-28 P/E basis.

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