CNBC’s Jim Cramer said Thursday that SK Hynix’s upcoming Nasdaq debut will give U.S. investors a new way to bet on the artificial intelligence boom, but warned the South Korean memory-chip giant comes with significant risks.
“We know the memory chip business is on fire and if you’re willing to accept the volatility, I think you could do a lot worse than this one,” said the “Mad Money” host. “If you really want it, though, put on a small position and leave room to buy more into weakness.”
SK Hynix is set to begin trading on the Nasdaq on Friday through American depositary receipts, or ADRs, which enable U.S. investors to more easily own shares of companies listed on foreign stock exchanges. The roughly $26.5 billion offering is expected to rank among the largest ever, following massive deals like Cerebras and SpaceX over the past months.
SK Hynix’s South Korea-listed shares have soared roughly 2,550% since ChatGPT launched in November 2022, propelling its market value above $1 trillion. Despite those gains, Cramer said the stock still looks inexpensive, trading at just over seven times this year’s earnings.
“Their memory chips may sell at a huge premium, but the stock trades at a discount,” he said.
Cramer noted the bull case rests on expectations that AI spending will continue driving enormous demand for memory chips. But on the flip side, Cramer said, “the big concern is that, historically, 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 trading underscores that volatility. SK Hynix shares have fallen about 25% from their June 25 peak, joining a broader sell-off in memory stocks that has hit fellow Korean tech giant Samsung and Idaho-based Micron despite strong earnings reports.
“Fortunately, that means you’re not coming in at the tippy-top for this stock. But this thing’s a rollercoaster that can go down fast,” Cramer said.
For investors considering SK Hynix, Cramer said the opportunity ultimately comes down to whether AI has permanently changed the notoriously boom-and-bust memory business. But that’s difficult to answer in the present.
“Again, historically, every memory chip boom has led to a memory chip bust.”
