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SK Hynix, the current leader in the memory space when it comes to semiconductors. SK Hynix, Micron, and Samsung are there. Personally, I am a shareholder of Micron. So everything I say about Micron, of course, comes from a perspective that I would say is biased because I own the shares, but the fact that SK Hynix is still the leader can give us a lot of information.
At the time of making this video, Micron has dropped 3.46% or should I say 3.46%. Apparently, that's the correct way to mention that it has a market capitalization of $121.7 billion and a forward P/E ratio of 14.3 times. I've talked a lot about Micron on this channel and the reason why I started opening a position in that company.
If you missed those videos, you can watch them on the channel. But what we can also see is that, before the market opens, Micron is not the only company in the semiconductor industry that is in the red. In fact, all the companies I personally follow are in the red before the market even opens. ARM has now fallen 4.13% because, well, I mean, the Stargate Project, it 's not very clear how much money is being invested in that.
Where does the money come from? Furthermore, it rose by about 16% yesterday. So, overall, I think futures are down and yields are up. Therefore, it is not something specific to Micron . It's at the industry-wide level. But we did get some interesting information from SK Hynix talking about HBM, DRAM, and NAND.
So, let's analyze all of that in this video. If you enjoy these types of videos, give this a thumbs up and subscribe if you haven't already. I really appreciate it. If you want to support me even more, check out the link in the description and in the pinned comment with the 10 best stocks to buy now or go to full.com/couchinvestor.
Thank you so much. So, first let's look at the big picture of SK Hynix. Fiscal year 2024 compared to fiscal year 2023. Revenue increased 102% year-over-year. Operating profit, well, basically they made a profit, and a pretty big one at that. Operating margin, the same story here. They went from a negative 24% to a positive 35%.
Net income, the same story. They made a profit . If we look at the fourth quarter compared to the third quarter of 2024 or the fourth quarter of 2023, we can see a year-on-year growth of 75% or 12% quarter-on-quarter. When it comes to revenue, operating profit increased by 15% quarter-on-quarter and 2,236% year-on-year.
The operating margin rose 1 percentage point quarter-on-quarter and 38 percentage points year-on-year. As for net income, there are also huge improvements, not only year on year, but quarter on quarter, with an increase of 39%. With regard to HBM specifically, they expect revenues in 2025 to grow by more than 100% year-on-year.
There is a growing demand from customers for AI. Support for the 12-level HBM 3 products is progressing well. They expect the volume of 12-level bits to surpass that of 8-level bits in the first half of 2025, as scheduled. We've talked about that too. Regarding Micron, they developed the industry's first 16-level HBM 3 using advanced MRMUF in November 2024.
They will continue development and ensure mass production readiness in 2025 for the 12-level HBM 4, which will be the main product in 2026, which I believe is about the same timeframe Micron expects to launch theirs. Regarding market prospects for DRAM and NAND: for DRAM in 2025, an increase of between 15% and 19% year-on-year, and for NAND, an increase of just over 10% year-on-year.
When you look at revenue by app and by product , again, it's not a surprise, to be honest. If we look at DRAM, if we look at the charts that include HBM, that becomes an increasingly large part of DRAM revenue. And if we look at revenue by product here as well, DRAM continues to take up more and more percentage of total revenue and that is expected to continue.
We had already heard it from Micron and now we are also hearing it from SK Hynix. They said the following. SK Hynix emphasizes that, with strong and prolonged demand for AI memory, the company achieved record results thanks to its world-leading HBM technology and a profit-oriented operation . HBM continued its strong growth in the fourth quarter, accounting for more than 40% of total DRAM revenue, and eSSD also showed steady sales growth with remarkable product competitiveness based on a profitability-oriented operation .
The company established a stable financial condition that led to a better result. SK Hynix forecasts that demand for HBM and DRAM for high-density servers, which is essential in high- performance computing or HPC, will continue to increase as investment by large global technology companies grows in AI servers and AI inference technology gains importance.
AI inference is going to be much, much bigger than training, so memory is going to play a critical role, which is why I'm extremely optimistic about memory, more specifically Micron. In the consumer market, where inventory adjustments are expected, sales of AI-equipped PCs and smartphones will expand, and the market situation will improve in the second half of the year.
They said that while pointing to weaker demand for memory chips commonly used in PCs and smartphones due to economic uncertainty and increasing competition from Chinese players. But of course, the main focus is definitely on the HBM , they say. Therefore, the company plans to expand the supply of HBM 3 and develop HBM 4 at the appropriate time to meet customer needs.
With stable demand, the company seeks to drive the transition to advanced processes needed for the production of competitive DDR5 and LPDDR5 . As for NAND, just like last year, the company plans to serve the market with profitability-oriented operations and flexible sales strategies . So, although both SK Hynix and Micron will be somewhat affected due to lower demand for memory chips used in PCs and smartphones, especially in the first half of the year.
The main focus is, of course, on HBM, and HBM will be huge. Micron specifically believes that in the future it will be much bigger for them than DRAM is currently. And if we look at the growth rate , we can see again that HBM continues its high growth in the fourth quarter, representing more than 40% of total DRAM revenue.
And then we look at application and graphics revenue, including HBM from Q4 2023, which continues to take up an ever- increasing share of DRAM revenue. Now, remember that we discussed the earnings report with Micron; Well, that's their latest earnings report; the next one will arrive at the end of March.
We see that quarter-over-quarter revenues are expected to decline by about 8.9%. It was a deficit of one billion dollars . Yes, a deficit compared to Wall Street's expectations. Wall Street expectations were close to $8.9 billion . The figure is turning out to be one billion dollars below that. But, in general, it's not a warning sign.
It's a matter of timing. There are still some problems here. Supply and demand, supply chain problems and yes, some weakness in the low-end markets, as we have seen. HBM is expected to continue doing quite well. Looking at the year-over- year comparison, analysts expect growth of around 40% annually in fiscal year 2025.
Another 26.9% year-over-year growth in fiscal year 2026. I think the 2027 figures here are going to change quite drastically. Right now, analysts expect sales to be basically flat. I believe the cycle will continue to rise for much longer than before. And from a profitability standpoint, well, this company will become increasingly profitable, generating more free cash flow each quarter, just as we saw with SK Hynix a couple of minutes ago.
And at this moment, Nasdaq's current average price target for Micron is about 20% above the price we are at today. We had a large decrease in the average target price after that deficit in the first quarter. And finally, let's analyze the action. We can see that we had a very solid rebound at the end of 2024 on that upward trend line.
We are now above the 200-day moving average , which stands at $111.3. The 15-day and 20-day options are around $99 or so. It seems there has been a little resistance around $110-$115 , right? We've been at those prices a couple of times in the last 6 months, what will it be? So yes, as long as we can stay above that 200-day moving average, I think we'll be fine.
But again, these are short- term things. If I can buy more Micron shares for under $100, I definitely will. In summary, good numbers from SK Hynix. demonstrating once again that HBM is where we should focus our attention . Yes, there will be minor hurdles regarding PCs and smartphones, and the memory components for them, but the big money, of course, will come from HBM and that's the focus.
And I think the cycles we 've seen before, because memory actors, yes, we have cycles of ups and downs, but this time I think because of HBM, we'll have a longer cycle. The cycle will simply continue for much, much longer because there is so much demand. There will be even more demand in the future.
You'll see many players like Gemini, OpenAI, Groq, and all of them coming out with new features and applications for their services that will focus heavily on memory. When we have robots, cars, whatever, they will all need a lot more memory. And that's where players like SK Hynix , Micron, and Samsung come in.
So, overall, the stock may be low, but overall, I don't see any bad news here that should destroy the investment thesis or anything like that . Let me know what you think in the comments section below. Like, subscribe, all that, and we'll see you all next time . Bye bye.
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