SK Hynix’s US-listed shares jumped 14% in their Nasdaq debut following its $26.5 billion share sale, the latest sign that investor enthusiasm for chip stocks remains despite a pullback from their recent lackluster rally.

The South Korean chipmaker is the latest to ride a frenzy of investor interest in companies seen to reap big benefits from the AI ​​revolution that has sparked hundreds of billions of dollars in capital spending.

Chip stocks have lost some momentum in recent weeks, due to investor concerns about slow AI spending. Shares of SK Hynix are down a quarter from a record high hit two weeks ago. Still, the company’s stock is up nearly 630% from a year ago.

“Global semiconductors is the most crowded business in the world right now,” said Thomas Hayes, chairman of Great Hill Capital in New York.

“Bankers and issuers, in this case SK Hynix, are meeting the demand where it is. They are seeing overvaluation and they want to take advantage of that.”

SK Hynix’s ADRs, of which ten equal one common share, opened at $170. The offer price was $149, a 2.7% premium to its average share price over the past three trading days in Seoul.

“Demand for US share sales has been stronger than some expected. That means the memory chip rally may have just taken a breather rather than peaking,” said Dan Coatsworth, head of markets at AJ Bell.

BIG INVESTOR POOL The offering, the second-biggest share sale in the US since SpaceX’s record IPO last month, will bring funds to SK Hynix to build new factories and give the chipmaker direct access to the world’s largest pool of investors. The offer was oversubscribed more than seven times, a source told Reuters on Thursday.

“This is the purest large-cap way for US investors to own the AI-memory theme, and Hynix deliberately chose the Nasdaq to tap demand and the higher valuations the US chip name commands versus Seoul,” said Giuseppe Sette, co-founder of investment analysis platform Reflexivity.

“SK Hynix makes its deal on the strength of the story, but then-upcomers may face a tougher, more selective market.”

The Icheon, South Korea-based company is the world’s largest maker of high-bandwidth memory (HBM) chips, which are essential for processing large amounts of data in AI-focused graphics processing units (GPUs) produced by the likes of Nvidia and AMD.

SK Group Chairman Chae Tae-won told Bloomberg TV that the company may offer memory-as-a-service to help overcome AI-related memory bottlenecks.

The company aims to develop 5 gigawatts of AI data center capacity outside of South Korea, Tae-won said, adding that it is open to further US investments.

The big-tech splurge on these advanced processors has turned HBM chips into a rare commodity, driving up prices and turning manufacturers into some of Wall Street’s hottest bets, as investors see the industry as a supplier of “picks and shovels” for the AI ​​boom.

Micron, SK Hynix’s US-based rival, has also rocketed 711% over the past 12 months. Analysts say SK Hynix’s US listing will help close the valuation disparity between the two companies by expanding its investor base and accessibility.

Despite its HBM dominance, SK Hynix trades at around 5.8 times forward earnings versus Micron at 7 times, according to LSEG data. Tech giants competing for faster and smarter AI models are pouring hundreds of billions of dollars into the infrastructure that powers the technology, raising equity and tapping debt markets to fund expensive expansions.

Analysts expect spending to continue rising in the near term. Global cloud and AI infrastructure capital spending is expected to reach $1.5 trillion by 2027, growing 40% to 50% year over year, according to a BofA Securities note this week.

However, questions are mounting about the returns on these massive investments, raising concerns that hyperscalers may eventually be forced into a spending slump.

“Investors will weigh the strength of last year’s rally against this latest volatility … The fear of oversupply is inherent to the industry,” said Matt Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs.