CNBC host Jim Cramer has sounded the alarm on SK Hynix Inc. (NASDAQ:SKHY), labeling the South Korean memory giant a "Monster" that is destabilizing global markets as retail margin calls and leveraged gambling overshadow strong chip fundamentals during July’s severe semiconductor rout.

‘Monster’ Volatility and Margin Call Panic

Reacting to the chaotic market action following SK Hynix’s earnings call, Cramer delivered a scathing critique of the semiconductor stock’s mounting influence on Wall Street.

“We will rue the day we let this Monster into our markets,” Cramer posted on X. “SK is more about margin calls and gambling than it is about DRAM pricing and capacity additions.”

Cramer’s warning aligns with concerns from South Korean financial regulators, who are considering capping single-stock leveraged ETF investments for retail investors. As retail traders aggressively buy speculative shares while foreign investors unload billions in tech equities, forced liquidations and margin call pressure have amplified market swings.

‘SK Hijinx’ Eclipses Record Q2 Results

The market chaos erupted despite SK Hynix reporting record-breaking revenue in the second quarter but missing profit expectations.

Its revenue rose 257%, more than triple, to a record 79.32 trillion KRW ($54.53 billion), as compared to the same period a year ago. The company also achieved an all-time high operating margin of 76%.

The South Korean chipmaker reported operating profit of 60.54 trillion KRW ($41.62 billion), up 557% from a year earlier, but below the 64 trillion KRW ($43.99 billion) forecast compiled by LSEG SmartEstimate.

Yet, conflicting investor interpretations and China competition fears triggered heavy selling. Cramer mocked the erratic stock reaction, highlighting the glaring disconnect between earnings and market performance: “SK Hijinx call has something for bears and bulls: demand great, capacity additions, great. I mean this thing is all over the place. And so is the stock,” Cramer wrote.

“We have news reports calling the quarter amazing and others calling it disappointing. And this is the most important stock out there?”

July Semiconductor Rout Deepens

The wild volatility has dragged down broader benchmark indices across Asia and the U.S. South Korea’s tech-heavy KOSPI index fell 5.99% on Wednesday and plummeted nearly 33.10% in July, falling over 39.66% from its 52-week peak of 9,385.59.

SK Hynix’s Korea-listed shares closed 9.61% lower in Wednesday’s session, up 115.21% YTD, but down 46.69% over the month and 23.44% over the last five sessions. The U.S.-listed ADR, on the other hand, closed 8.98% lower at $130.17 on Tuesday, and it was 23.43% lower since its recent listing. It was down 0.57% in premarket on Wednesday.

Additionally, iShares Semiconductor ETF (NASDAQ:SOXX), which tracks the semiconductor index, was up 61.18% year-to-date, lower by 16.69% over the month and 99.98% higher over the year.

The Nasdaq 100 index neared the correction zone on Tuesday as it fell 9.75% to 27,763.14 points from its previous record of 30,762.20 points. However, the ETF tracking it, Invesco QQQ Trust (NASDAQ:QQQ) was 0.23% higher in premarket on Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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