Jim Cramer highlighted SK Hynix's impressive quarterly results, which exceeded revenue expectations by approximately 6% and showcased gross margins of 85.7%. The company's stock surged over 13% following the announcement, positively impacting other chipmakers like Micron, Arm, and AMD.
Cramer pointed out that SK Hynix's low valuation, trading at just four times its 2027 earnings, allowed for a substantial rally. The company also projected mid-20% shipment growth for the upcoming quarter and indicated that its production is effectively sold out through 2029 due to long-term customer agreements.
This strong demand for memory chips, particularly for AI data centers, has led to a confident outlook, with plans for significant investments in manufacturing equipment. Cramer believes that the combination of low valuation, strong earnings, accelerating growth, and shareholder returns provides a model for AI-related companies to attract investors in a challenging market.
He also noted that these results bode well for Micron, which shares similar characteristics and may benefit from easing restrictions on buybacks in the near future