SK Hynix (SKHY -3.35%) has got off to an indifferent start on the U.S. stock market since its listing on the Nasdaq in July, with the memory giant dropping 3% since its Nasdaq debut.
However, SK Hynix is one of the most important companies in the artificial intelligence (AI) infrastructure ecosystem. It controls a significant share of the memory market, an industry where demand has been significantly exceeding supply due to the build-out of AI data centers.
The outstanding memory demand and the resulting supply shortage have sent stocks of SK Hynix's peers, Micron Technology and Sandisk, soaring over the past year or so. I won't be surprised to see SK Hynix following suit, making this semiconductor stock an ideal fit for investors looking to build a million-dollar portfolio.
Let's look at the reasons why.
Image source: The Motley Fool.
SK Hynix's memory dominance will translate into phenomenal growth
The memory market's revenue has been soaring at an incredible pace. AI data centers require substantial compute and storage capacity to run AI workloads, which explains why demand for these chips has significantly outpaced supply.
NASDAQ: SKHY
Key Data Points
As a result, memory prices have soared remarkably. Deloitte estimates that the price of dynamic random-access memory (DRAM) could jump by 4x in 2026. The consulting firm also notes that new memory capacity won't be coming online until 2029 or 2030, suggesting that the strong pricing environment is here to stay.
So, it is easy to see why market research firm TrendForce anticipates the DRAM market's revenue to rise from $153.6 billion last year to $618.7 billion in 2026. The firm expects another solid jump in 2027, projecting $903.3 billion in DRAM revenue.
Similarly, the need to store enormous amounts of data in AI data centers for training AI models and running inference applications has created a supply shortage in the NAND flash market. This explains why the NAND flash market's revenue is projected to jump from $71 billion last year to $270.6 billion in 2026. TrendForce expects growth to continue in 2027, with NAND flash industry revenue projected to reach $379.4 billion.
All this is great news for SK Hynix investors. After all, it enjoys 26% share of the DRAM market, according to Counterpoint Research. Meanwhile, SK Hynix's NAND flash market share is at a healthy 22%. Given that the overall memory market's revenue is poised to hit $1.28 trillion in 2027, SK Hynix is poised to sustain the impressive growth it has been clocking.
Data by YCharts
More importantly, SK Hynix's valuation suggests that the market isn't pricing the company's outstanding growth prospects in the stock price. That's why I think it looks like an ideal growth stock for anyone looking to build a million-dollar portfolio.
The stock deserves to trade at a premium valuation
We have already seen the impressive growth SK Hynix has been clocking. Moreover, the memory market's outlook explains why analysts have become bullish on the company's growth prospects.
Data by YCharts
SK Hynix's solid top-line growth will translate into a nice jump in its bottom line as well.
Data by YCharts
The chart above shows that analysts forecast SK Hynix's earnings to grow at a 20%-plus rate over the next couple of years. However, supply constraints and robust demand for memory could help it do better than that.
But even if SK Hynix's earnings grow in line with consensus estimates to $42.21 per share in 2028, it can deliver tremendous upside. That's because SK Hynix trades at just 6 times forward earnings. The tech-focused Nasdaq-100 index, for comparison, has a forward earnings multiple of 24. Ideally, SK Hynix should be trading at a significant premium to the index due to its terrific growth and sunny prospects.
However, even if this AI stock trades at a conservative 15 times earnings at the end of 2028, its stock price could reach $633 (based on the $42.21 earnings per share estimate). That's 3.8x its current stock price. If the market rewards SK Hynix with a premium valuation, it could surge even higher.
In the end, it is easy to see why SK Hynix stock seems worth buying for growth-oriented investors looking to build a million-dollar portfolio, as its cheap valuation and growth potential could make it a multibagger.
