SK Hynix Plunges as Morgan Stanley Downgrade Signals Fading Chip Demand

SK Hynix`s stock experienced a significant drop, negatively impacting other semiconductor companies, following a Morgan Stanley downgrade. The downgrade, from overweight to underweight, was attributed to weakening pricing power in the memory chip market. Analysts believe the favorable conditions in the memory chip market are ending, leading to anticipated challenges in revenue growth and profit margins. While SK Hynix saw success earlier in the year due to a deal with Nvidia, concerns about excess inventory and decreasing demand, particularly in the smartphone market, are overshadowing the initial AI-driven optimism. This perfect storm of negative factors has led Morgan Stanley to label SK Hynix as its least favored memory chip maker.