Chip Stocks Diverge: SK Hynix Jumps 6% on $29 Billion Buyback as Broadcom Slides

Key Takeaways

• SK Hynix shares gained around 6% after the memory-chip producer announced a record $29 billion share repurchase and cancellation programme.
• Broadcom extended its decline to more than 20% from recent highs, while a new Google–Marvell custom-chip agreement added further pressure.
• SanDisk, Micron and Marvell advanced, highlighting continued investor interest in AI memory, storage and networking companies.

Semiconductor Stocks Split as Investors Reassess the AI Trade

Semiconductor stocks moved in sharply different directions as company-specific developments replaced the broad, industry-wide rallies that previously characterised the artificial intelligence trade.

SK Hynix led gains among memory-chip companies after unveiling a record shareholder-return programme. Its US-listed shares advanced around 6% in early Wednesday trading, while SanDisk gained roughly 5% and Micron Technology climbed about 3% in sympathy.

Broadcom moved in the opposite direction. The custom-chip and networking company has now fallen more than 20% from its recent high, despite analysts maintaining bullish long-term forecasts for its AI semiconductor business.

The latest divergence suggests investors are becoming increasingly selective. Companies offering clear cash returns, confirmed customer agreements or rapidly expanding backlogs are attracting buyers, while highly valued businesses facing customer-concentration questions remain vulnerable to selling.

SK Hynix Launches Record $29 Billion Buyback

SK Hynix’s board approved the repurchase and cancellation of 40 trillion won, equivalent to approximately $28.6 billion, of its own shares. It represents the largest treasury-share cancellation programme announced by a South Korean listed company.

SK Hynix’s announcement

source: https://news.skhynix.com/en/share-buyback-and-retirement/

The programme covers approximately 24.07 million shares, representing 3.3% of the company’s issued share capital. Purchases are scheduled to begin on August 20 and continue for around three months, with all acquired shares cancelled after completion.

SK Hynix also raised its shareholder-return target from within 50% to more than 50% of cumulative free cash flow generated between 2025 and 2027. Additional buybacks, regular dividends and possible special dividends remain under consideration.

The company held approximately 69 trillion won in net cash at the end of the second quarter, giving it considerable flexibility to balance shareholder returns with spending on high-bandwidth memory and other AI-related capacity. described the shares as undervalued relative to the company’s competitiveness, cash generation and long-term growth potential.

The announcement followed a volatile period for the stock. SK Hynix had dropped around 9% in the preceding US session amid concerns about elevated bond yields and whether hyperscalers could sustain their current pace of AI capital expenditure.

Its 6% rebound therefore recovered only part of that decline. Nevertheless, the scale of the repurchase sent a strong signal that management expects the company’s cash flow and memory-market position to remain robust.

The news also supported SK Hynix’s US-listed peers. SanDisk rose around 5% and Micron gained approximately 3% during early trading, reflecting expectations that strong AI-memory demand and improving cash generation could support the wider group.

Broadcom Falls Despite Bullish Analyst Target

Broadcom shares have declined more than 20% from their recent peak as investors question whether the company can maintain its exceptional AI growth rate and dominant position in custom silicon.

The pullback has continued despite TD Cowen reiterating a Buy rating and maintaining a $500 price target. That target implied approximately 31% upside from Broadcom’s previous closing price near $380. Other published analyst estimates also remain substantially above the current share price.

Broadcom’s underlying results have remained strong. Its fiscal second-quarter revenue increased nearly 48% year on year, while adjusted earnings exceeded market expectations. However, strong historical growth has raised the level of performance required to satisfy investors.

Fresh competitive concerns emerged after Google expanded its relationship with Marvell Technology. Broadcom has historically been Google’s principal custom-chip partner, helping develop tensor processing units used for AI workloads.

Under the new arrangement, Marvell will help Google develop processors, storage controllers and networking products associated with its custom AI systems. Google also received a warrant to acquire as many as 58.97 million Marvell shares at $206.58 each, potentially creating a stake worth $12.2 billion.

Marvell shares jumped nearly 8%, while Broadcom fell more than 5% during the session. The agreement could generate as much as $120 billion in revenue for Marvell through fiscal 2033 if performance targets are achieved. Details of the Google–Marvell agreement suggest Google is broadening its AI supply chain rather than necessarily replacing Broadcom.

That distinction will be important. The addressable market for custom AI accelerators and networking equipment is expanding rapidly enough to support several suppliers. However, Google’s willingness to establish a deeper strategic relationship with Marvell may reduce expectations that Broadcom will capture most of its future custom-chip spending.

What Could Drive the Next Move in Chip Stocks?

The next phase of the semiconductor market may depend less on general enthusiasm for AI and more on measurable returns from infrastructure spending.

For SK Hynix, attention will focus on the execution of its buyback and whether high-bandwidth-memory pricing remains firm. Micron and SanDisk could continue to trade alongside SK Hynix as investors assess memory supply, customer inventories and data-centre demand.

Broadcom traders will monitor whether Google’s Marvell partnership affects existing TPU programmes or simply adds capacity to a rapidly growing market. Broadcom’s next earnings update will also provide fresh evidence on AI semiconductor revenue, networking demand and customer concentration.

For Arista and Marvell, order visibility and revenue conversion will be critical. Strong backlogs support future growth, but stretched valuations could amplify volatility if hyperscalers delay projects or reduce capital expenditure.