Key insights
- The author argues that memory manufacturers like SK Hynix and Micron, which produce High Bandwidth Memory (HBM) essential for Nvidia's AI chips, are undervalued compared to Nvidia. Given the dependence of Nvidia's growth on HBM, the author suggests that memory companies should also be considered secular growth stories, not just cyclical plays, and their current low P/E ratios present a buying opportunity.
I keep seeing the same tired argument: 'Don't buy SK Hynix or Micron, RAM is cyclical and we’re at the top.'
First off, if RAM is cyclical, then Nvidia and TSMC are cyclical too. You can’t build a Blackwell or Vera Rubin B100/B200 cluster without massive amounts of HBM3e and HBM4. If the AI 'cycle' ends for memory, it ends for the logic chips too. You can't have a brain without a nervous system.
The Valuation Gap is Hilarious: Nvidia and TSMC have been rallying for years and trade at massive P/E multiples. Meanwhile, the memory players only really started their 'AI' rally in earnest over the last 12-18 months.
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Fact: In Q1 2026, SK Hynix posted an operating margin of 72%. That actually beat Nvidia’s 65% margin from their last quarter.
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Fact: Memory is no longer a 'commodity' where you just buy the cheapest stick. HBM (High Bandwidth Memory) is a specialized, high-margin, custom-integrated component. • Fact: SK Hynix and Micron are effectively sold out of HBM through 2027.
Nvidia (NVDA): ~40x P/E. People are paying $40 for every $1 of profit because they expect 'infinite growth.' • Broadcom (AVGO): ~41x P/E. • Micron (MU): ~7.8x P/E. • SK Hynix: ~5.9x P/E.
SK Hynix is trading at 6 times earnings while providing the HBM4 memory that Nvidia cannot ship without.
Everyone is fine with Nvidia trading at a 40x P/E and Broadcom at 41x, calling them 'secular growth stories.' But the second you mention SK Hynix (P/E ~5.9x) or Micron (Forward P/E ~8x), people scream 'CYCICAL! SELL!' Here’s the reality: You cannot ship a single Nvidia Blackwell or Rubin chip without High Bandwidth Memory (HBM). If Nvidia is a secular grower, so is the memory that fuels it.
So people, please stop!!! Sk Hynix needs at least 788% stock increase to reach Nvidia PE level.