- SK Hynix ADRs surged 5.6% in pre-market trading after a prior selloff
- The company announced a $29 billion share buyback to boost investor confidence
- SK Hynix plans to buy and cancel 24 million treasury shares by November 19
The American Depositary Receipts of SK Hynix whiplashed into the green during pre-market trading on Wednesday, indicating a higher open for the South Korean chip giant on the Wall Street.
Futures tied to the semiconductor company traded 5.6% higher at $164.32. The sharp surge comes after a steep selloff in the preceding session when shares went as low as $154.53.
Earlier in the day, the company announced a $29 billion share buyback to soothe jitters around sustainability of sky-high AI spending, and re-ignite confidence in AI trade.
SK Hynix will buy 40 trillion won ($29 billion) of stock and return more of its profits to shareholders, according to the recently revealed plans.
The memory manufacturer said it will buy back as many as 24 million treasury shares between Aug. 20 and Nov. 19 and cancel them, as per a regulatory filing Wednesday.
SK Hynix, which is one of the 'big three' memory chip makers, also expanded its shareholder return pledge to more than 50% of free cash flow, up from a previous target of within 50%.
Earlier this month, the company unveiled the first standard specifications for High Bandwidth Flash, a next gen storage technology in collaboration with Sandisk.
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Chip Rally Revived?
Rest of the AI-linked chip stocks painted a mixed picture, with futures tied to Nvidia Corp. and Microchip Technology rising up to 1%, while Micron Technology Inc., Sandisk Corp. remained choppy and slipped to the red.
AI trade has been traversing through a volatile weather amid growing investor concerns around AI spends, infrastructure buildout, capital expenditure and whether the gains suffice to justify stocks' valuation.
"Investors are now questioning the pace at which massive AI infrastructure spending will translate into profitable returns, while higher bond yields weight on valuations across long-duration growth assets," said Harshal Dasani, Business Head, INVAsset PMS.
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