SK hynix's (SKHY) current upswing in chip demand is expected to run through 2027, helped by long-term supply agreements and the company's strong position in high-bandwidth memory used in AI accelerators, RBC Capital Markets said Tuesday in a report.

Contract resets for high-bandwidth memory in 2027 should help balance any cooling in conventional DRAM, the dynamic random-access memory used in most computers and servers, the report said. SK hynix's lead in advanced memory and its valuation discount to US peers make the shares appealing at current levels, RBC said.

Recent worries about potential oversupply in NAND, the flash memory used in solid-state storage, appear overstated, and any slowdown should have only a modest effect on earnings, the report said.

RBC estimates SK hynix holds about 55% of the high-bandwidth memory market and expects the company to maintain its dominant position into 2027 despite rising competition.

RBC initiated coverage of SK hynix with an outperform rating and a $200 price target on the stock.

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