The article discusses Jim Cramer's bullish outlook on SK Hynix following its Nasdaq debut. The South Korean company raised $26.5 billion through American depositary receipts, providing U.S. investors with exposure to the AI-driven memory chip market. Despite significant demand due to AI, Cramer warns about the historical boom-and-bust nature of the memory chip industry, suggesting that investors be cautious and gradually build positions. The memory chip sector is evolving, with increased focus on high-bandwidth memory (HBM) for AI applications, potentially altering traditional market cycles. However, building new fabrication plants is costly and time-consuming, and some analysts believe cyclicality may return as supply grows.

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‘You don’t want to be left holding the bag’: Jim Cramer is bullish on SK Hynix, but warns of a boom-and-bust risk

Vawn Himmelsbach

Thu, July 16, 2026 at 12:30 PM EDT6 min read

The world's second-largest maker of memory chips has made its Nasdaq debut. On July 10, SK Hynix [NASDAQ:SKYT], based in South Korea, listed its American depositary receipts (ADRs) on Nasdaq, raising $26.5 billion (1) with the share sale.

This will give U.S. investors a new way to bet on the AI boom, according to Jim Cramer, host of CNBC's Mad Money. And the stock is relatively cheap.

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"Their memory chips may sell at a huge premium, but the stock trades at a discount," he said.

But Cramer warned that buying SK Hynix still comes with significant risk (2). Though the AI boom is driving unprecedented demand for memory chips, "the big concern is that, historically, memory chips have been a boom-and-bust business, so when supply eventually catches up with demand, you don't want to be left holding the bag."

Why the memory market is changing

The memory chip market has traditionally been characterized by extreme swings between shortages, which leads to a surge in prices, and oversupply, which leads to crashing prices. But the AI boom has altered this traditional boom-bust cycle.

Memory chip fabrication plants, or fabs, are incredibly expensive to build and operate. Only a handful of companies — including Samsung, SK Hynix and Micron — make memory chips, and it can take years to build new fabs.

Memory in the form of DRAM (dynamic random access memory) powers consumer electronics such as smartphones and laptops. HBM (high-bandwidth memory), on the other hand, is an ultra-fast type of memory that's needed to power AI accelerators and GPU systems.

"A single AI server consumes 10 to 20 times more memory than a conventional workload server, so as the hyperscalers build out, they pull a hugely disproportionate slice of global supply," Francisco Jeronimo, VP for EMEA and devices at market research firm IDC, told TechNewsWorld (3).

Production has been diverted away from consumer electronics (which is why the price of your phone is going up) to meet the needs of hyperscalers — cloud giants and AI developers — such as Amazon Web Services, Microsoft Azure, Google Cloud, Meta and Alibaba Cloud.

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But fabs can only produce a finite amount of silicon wafers — used for DRAM and HBM — each year. And the big memory chip makers are prioritizing HBM, thanks to multi-year agreements with AI companies that pay billions upfront for guaranteed access.

This is squeezing supply and driving up prices while stabilizing demand and revenue for memory chip makers. For example, SK Hynix has a multi-year partnership with Nvidia (4) to advance its next-generation infrastructure roadmap — guaranteeing access for Nvidia and protecting revenues for SK Hynix.

Is the boom-bust cycle over?

For the time being, the traditional boom-bust cycle has been upended, leading to severe shortages and price hikes with seemingly no end to the AI boom in sight.

With less supply for smartphones, computers and gaming consoles, consumer electronics are becoming more expensive. And memory chip makers like Samsung, SK Hynix and Micron have seen their profits (and stock prices) soar.

Some industry watchers say memory chips are no longer a cyclical commodity.

"The spot-buying, short-contract model is increasingly unworkable," wrote Soo Kyoum Kim, associate program vice-president of semiconductors and enabling technologies with IDC, in a blog post (5). "Across industries, buyers are rethinking long-term agreements, dual-sourcing and design choices to reduce memory dependency risk."

The only way to increase supply is to build more fabs — and it's a lot more complicated than building a typical factory (and it's why there aren't more fabs in the U.S.).

It costs tens of billions of dollars (6) to build a single fab, which includes costly lithography machines — the newest systems cost $380 million each — that print circuit patterns onto a silicon wafer. Plus, they require ultra-pure water and air, since a single speck of dust could ruin a batch of chips.

New fabs aren't expected to come online until late 2027 or 2028.

Looking ahead

Others expect cyclicity to come back as supply increases and as AI systems become more efficient (doing more with less).

"Anytime people show me these curves that just go to the sky with no end, that never continues forever," Willy Shih, a Harvard Business School professor who's been tracking memory cycles since the 1980s, told Fortune (7). "This too will pass."

William Kerwin, a senior technology stock analyst at Morningstar, said in a recent stock analyst note that what goes up must come down … eventually. And memory's cyclical nature is expected to return (8) in the long term.

"There are some bulls in the market that are saying that AI is kind of the end of cycles in the memory market. We disagree," Kerwin said during an episode of The Morning Filter podcast (9).

"What I've been calling this is really a particularly strong and particularly durable upcycle, but a cycle all the same," Kerwin added. As memory chip makers build out new supply in late 2027 and 2028, "we think that's going to apply some downward pressure on these lofty prices and bring these results back down to earth a little bit, and likely, in my view, also the stock prices."

Cramer's recommendation? "We know the memory chip business is on fire and if you're willing to accept the volatility, I think you could do a lot worse than this one," he said (2). "If you really want it, though, put on a small position and leave room to buy more into weakness."

‘You don’t want to be left holding the bag’: Jim Cramer is bullish on SK Hynix, but warns of a boom-and-bust risk

‘You don’t want to be left holding the bag’: Jim Cramer is bullish on SK Hynix, but warns of a boom-and-bust risk

Must Read

Why the memory market is changing

Is the boom-bust cycle over?

Looking ahead

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