CNBC’s Jim Cramer said Thursday. SK Hynix The upcoming Nasdaq market debut will give U.S. investors a new way to bet on the artificial intelligence boom, but the South Korean memory chip giant warned it comes with significant risks.
“I know the memory chip business is under fire, but if you’re willing to accept volatility, I think you can do much worse than this,” the “Mad Money” host said. “But if you really need it, put a small position and leave room to buy more weakness.”
SK Hynix plans to begin trading on the Nasdaq on Friday through American Depositary Receipts (ADRs), which make it easier for U.S. investors to own shares in companies listed on foreign stock exchanges. The acquisition price is approximately $26.5 billion. cerebrum and space x For the past few months.
SK Hynix’s South Korean-listed shares have soared about 2,550% since the launch of ChatGPT in November 2022, and its market value has exceeded $1 trillion. Despite the gains, Cramer said the stock still looks cheap, trading at just over seven times this year’s earnings.
“Their memory chips may sell for high prices, but their stock prices are trading at a discount,” he said.
Cramer noted that the bull market is based on expectations that spending on AI will continue to drive massive demand for memory chips. But on the other hand, Kramer said, “The big concern is that memory chips have historically been a boom-and-bust business, so when supply eventually catches up to demand, you don’t want to be left holding the bag.”
Recent trading highlights that volatility. SK Hynix stock has fallen about 25% from its June 25 high, joining a broader decline in memory stocks that has hurt fellow South Korean tech giants Samsung and Idaho-based Micron despite strong earnings reports.
“Fortunately, that means this stock isn’t going to hit a peak. But it’s a roller coaster that’s going to go down quickly,” Cramer said.
Kramer said the ultimate opportunity for investors considering SK Hynix will be whether AI can permanently change the memory business, which is notorious for booms and busts. But it’s difficult to answer that at this point.
“Again, historically, memory chip booms have always led to memory chip busts.”
