Changing Seasons
Here's a way the stock market could work: A company wants to do something useful. It sells stock to investors, so it has the funds to do this useful thing, like build railroads or lay fiber optic cables. Stock investors get shares. The company gets dollars. It goes out and does the useful thing. Customers pay it. It gives whatever it has after expenses back to its shareholders.
For the past few decades, it’s worked more like this: companies want to do a useful thing. That thing doesn't take a lot of dollars. It's a website or snazzy design that someone else builds. It pays software engineers in shares and instant noodles to build the thing. Customers pay it. Shareholders and employees benefit from share prices increasing. The company helps this along by buying shares of its own stock and retiring them.
Capital spring
The US market worked the first way for a long time. Companies have been giving more money back to shareholders than they’ve been raising since the late 1900s. It’s been a long winter for IPOs. That will change in 2026. Companies will shift back to raising more money than they payback. And, boy, those guys are raising a lot. SpaceX launched the largest IPO in history, raising $75 billion. Google, not to be out done raised $85 billion from selling new shares. It did that within days of SpaceX's debut. A lot of the money being raised is to fund AI adventures.
Up the AI stream from both those companies sits SK Hynix. Lamplighter's talked about SK Hynixbefore. It recently became Korea's most valuable company. It, along with Micron and Samsung, makes computer memory. SK Hynix leads in AI-specific HBM memory.
Customers love those chips. They've booked SK Hynix HBM capacity three years out. This has been a big change from just a few years ago when the company struggled to give product away. But customers like SpaceX, Google and Nvidia expect a more orderly market. They want to know they're getting chips when they need them. They want SK Hynix to build more of them.
SK Hynix, like SpaceX and Google, sees the investor appetite for AI shares and would like to move things forward faster. The investor pool is looking a bit thin in Korea, its home market. It's already a massive slice of the economy and the market. Raising domestic capital could be a challenge. So, it announced it would raise $29 billion or so from the US market. That would have been the largest equity debut before in any year before 2026.
The US capital markets are by far the largest in the world. Many US investors, though, are limited to investing in shares that trade in the US. They couldn't provide capital to SK Hynix even if they wanted to. To boot, US investors value AI-related things much more highly than investors in Korea. Micron trades about 25% more per dollar of profit as SK Hynix, despite SK being the market leader. It's easy to see the appeal, especially as SK Hynix has moved into a more visible role in the global technology ecosystem.
Summer heat
The market's shifted from one organized around returning capital to shareholders to one taking in huge amounts of capital for big, ambitious projects. Not all of these will succeed. Some might.
On the part of SK Hynix, demand for HBM — its most important product — is firm for the next few years. So far, all signs point to higher demand in the future rather than a crash. It'll use the funds to fire forward a slate of building projects in the US and Korea to serve that demand faster. Attracting a more global investor base will enable it to do that more efficiently. If the projects produce returns that management expects and if its US shares invite a more favorable valuation, the move looks to bring balmy results for existing shareholders too.
Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.