Nvidia's Secret Weapon: A Partnership That Could Drive Long-Term Success

The AI infrastructure market is experiencing supply bottlenecks, particularly in high-bandwidth memory (HBM), which is essential for reducing latency and optimizing performance in artificial intelligence chips.

Nvidia has a close relationship with SK Hynix, the Korean memory maker that holds 50% of the global HBM market share. The two companies have formed an important supply and co-development partnership, with SK Hynix supplying Nvidia with an estimated $500 billion worth of memory over several years.

This deal gives SK Hynix a huge anchor contract with the largest AI infrastructure company on the planet, providing visibility to increase capacity while ensuring demand. With a forward P/E of 5.5 times 2027 analyst estimates, SK Hynix stock has room to run if its business proves less cyclical than in the past.