Investing.com-- South Korea’s KOSPI rose sharply and moved back towards near two-year highs on Wednesday, with support coming chiefly from chipmaker SK Hynix on growing hype over artificial intelligence.
The KOSPI index rose 1.1%, vastly outperforming its Asian peers. SK Hynix Inc (KS:000660), which is the second-largest stock on the index by market capitalization, was the top boost to the KOSPI with a 2.3% gain.
SK Hynix remained close to a record high, with its latest gains driven by Vice President Hoyoung Son flagging plans to become a “total AI memory provider.”
SK Hynix is one of the only global memory chip makers to produce high bandwidth memory (HBM) chips, which are an integral part of the high-speed computing requirements for generative artificial intelligence (GenAI) programs.
The firm stands to benefit greatly from increased demand for AI, especially as the popularity of GenAI steadily increases. Recent media reports also showed that SK Hynix had sold out its entire HBM production quota for 2024, and that it expected strong growth in the coming year.
Still, the firm now faces increased competition from other players in the memory chip industry, with both Samsung Electronics Co Ltd (KS:005930) and Micron Technology Inc (NASDAQ:MU) both announcing more forays into HBMs and AI-linked chips.
But SK Hynix has so far maintained a lead over its peers by increasing its production capacity for its most advanced grade of HBMs.
Sentiment towards AI-fueled demand was also boosted last week by consensus-beating earnings and guidance by market darling NVIDIA Corporation (NASDAQ:NVDA), which is at the heart of an AI-driven bump-up in valuation.
SK Hynix is also trading at a forward price-to-earnings ratio of 14.84, which is still lower than its peers. Analysts had recently noted that such a trend could herald more price gains for the stock in the coming months, especially if AI demand helps it deliver stronger earnings.