SK Hynix: Do you want chips with that?
These are lively times on the Korean peninsula, with North Korean state-sponsored hacking group TraderTraitor widely suspected of leading the attack that pinched $6.3bn of crypto from Binance in a lucrative half-hour. Meanwhile south of the border, the tech-heavy Kospi index has been all over the place, doubling in value by June before giving back most of its gains in a rout that saw about 1.2-million small investors facing margin calls by the end of July.
SK Hynix’s share price has also been flying around like a balloon in a hurricane, so it’s encouraging to see that the semiconductor company has got on with doing what it does best. It announced quarterly results that were better than the market was expecting and gave forward guidance that reassured investors the demand side remained rock solid. The company said its entire production of DRAM (dynamic random access memory) chips and high-bandwidth memory stacks were sold out until 2029, and it anticipated that memory demand would continue to increase as the adoption of AI moves beyond big tech to the broader corporate sector and the public sector.
SK Hynix said it expected the financial position of its major customers to improve in the short term, supporting further investment in infrastructure, and it would continue to build new chip factories ahead of demand, but in a way that would allow it to slow expansion in the event of a weakening market. With operating profit up 38% in the quarter to $62.5bn and an operating margin of 79.7%, it remains a juggernaut that is a long way from running out of steam.
Alphabet: Just google Catch-22
Thursday was a day that won’t be part of any highlights reel for investors in Alphabet, as a mildly downbeat results announcement saw the Google-owner’s stock drop 13% and wiped out market capitalisation of $500bn in the second-biggest single-day tumble in Wall Street history — beaten only by Nvidia’s mighty $593bn plunge in January 2025. The results were far from a debacle, and many companies would be more than happy to record a 12% year-on-year revenue increase like Google did, but this was a long way from the 20% it was growing at earlier in the year.
Cash flow was a concern as AI spending reached $50bn in the quarter, leading to a negative cash flow of $9.1bn, only the second negative quarter since Google listed in 2004. The real worry, however, was in its core search advertising business, where the problem appears to be that its AI mode is doing far too good a job. Its conversational text answers are eating into the multiple advertising opportunities contained in the list of links provided by traditional search.
The great benefit of having pockets as deep as Alphabet’s is that it has no problem dropping a few billion here and there developing projects that look as though they may have legs down the road, and this is certainly the case with its robotaxi business Waymo. In 2025 it tripled its annual volume to 15-million rides, and in 2026 it is launching in an additional 20 cities including London and Tokyo. The company said it is no longer proving a concept, it is scaling a commercial reality that looks set to be game-changing.
