Technology morning briefing: Memory price increases boost Hynix; hard drive and data-center equipment results diverge

Where did Hynix's upside come from?

SK Hynix reported third-quarter revenue of 104.6 trillion won, up 32% quarter over quarter, and operating profit of 83.3 trillion won; both exceeded market expectations. The main drivers were DRAM average selling prices rising in the high 20% range quarter over quarter and NAND prices rising in the mid-20% range, both above model assumptions.
The company guided for DRAM bit shipments to rise in the mid-20% range quarter over quarter in the fourth quarter. On that basis, the report estimates fourth-quarter revenue and operating profit will be about 10%–20% above market expectations before the earnings release.
Long-term agreements with 14 customers already cover more than half of capacity for 2027 and 2028, with prices floating with the market within ranges agreed by both parties. Management said DRAM and HBM were essentially sold out through 2029, though that statement partly depends on purchase volumes still under discussion.
Price increases are slowing: The quarter-over-quarter rise in NAND average prices fell from the mid-50% range last quarter to the mid-20% range this quarter. HBM's share of revenue also declined, making earnings more dependent on conventional DRAM prices.

Seagate's revenue for the quarter ended in September was 4.23 billion dollars, above the market expectation of 4.14 billion dollars but below the buy-side threshold of around 4.27 billion–4.31 billion dollars. The midpoint of its revenue guidance for the quarter ending in December, at 4.8 billion dollars, was also above the market expectation of 4.5 billion dollars but below the buy-side range of 4.9 billion–5.05 billion dollars.
Shipped capacity was 220 EB this quarter, up just 1% quarter over quarter and below market expectations of approximately 235 EB. The sequential revenue increase mainly came from pricing and product mix; revenue per TB was about 19.2 dollars, up 16% quarter over quarter.
The price increases partly reflect the pass-through of component costs, and the 16% sequential increase should not be treated as normal. Cost per TB rose about 3% quarter over quarter, while its year-over-year decline narrowed from about 16% last quarter to about 6%; management does not consider higher prices for purchased components a one-off factor.
Management attributed the shipment shortfall to inventory preparations for Mozaic 4 ahead of customer certification and expects shipments to increase significantly in the quarter ending in December; inventory rose 129 million dollars quarter over quarter to 1.7 billion dollars.

Vertiv's third-quarter revenue was 4.31 billion dollars, about 15% above market expectations; organic growth was 55%, above the company's previous guidance of 34%–36%. Organic growth in the Americas was 66%, helping ease previous concerns about execution in the region.
The company raised its full-year organic growth guidance from 30%–32% to 37%–39%. Organic order value more than doubled year over year, and deferred revenue from customer prepayments rose 490 million dollars quarter over quarter to 4.1 billion dollars.
Full-year revenue guidance was raised by 650 million dollars, of which 563 million dollars came from third-quarter revenue above the original guidance. Implied fourth-quarter revenue at the midpoint was about 4.41 billion dollars, only about 90 million dollars above the amount implied by the original full-year guidance. Sales in the Americas rose 75% year over year, while the margin increased by just 10 basis points to 29.4%.

GE Vernova's third-quarter adjusted EBITDA was 1.94 billion dollars, above market expectations of approximately 1.69 billion dollars. Free cash flow of 5.4 billion dollars was also well above expectations, but came mainly from changes in working capital, including customer prepayments.
The gas business signed 11 GW of new contracts this quarter, below the roughly 20 GW signed in each of the previous two quarters. After accounting for deliveries and other changes, the total contracted amount rose from 116 GW to 122 GW. To reach the company's raised year-end target of at least 130 GW, approximately 13 GW of new contracts would be needed in the fourth quarter, assuming deliveries of about 5 GW per quarter.
The company raised its full-year free cash flow guidance to 16 billion–17 billion dollars. It had already generated 15.3 billion dollars in the first three quarters, implying approximately 700 million–1.7 billion dollars in the fourth quarter.

NXP's third-quarter revenue was 3.79 billion dollars, up 19% year over year. However, the midpoint of fourth-quarter revenue guidance was 3.85 billion dollars, up 2% quarter over quarter and below the 3%–4% sought by the buy side.
Book-to-bill ratios exceeded 1 across all end markets and regions, and the order backlog extended further into 2027. Around 80% of products had lead times exceeding 16 weeks, compared with 25% a year earlier. However, management has yet to see broad-based restocking in the automotive industry.
Management outlined a framework for double-digit revenue growth in 2027 and a gross margin reaching 60% during the year, but 60% is a level to be reached during the year, not the full-year level. Operating expenses in the first half are expected to be about 23% of revenue, above the third quarter's 21.4%, limiting operating leverage.