As SK Hynix begins trading American depositary receipts (ADRs) on the U.S. Nasdaq, U.S. investors will also be able to invest directly in growth in artificial intelligence (AI) memory. Jim Cramer assessed SK Hynix’s entry into the U.S. market as a new AI investment opportunity, but warned investors to watch out for the high volatility typical of the memory sector.

According to CNBC on July 9 local time, SK Hynix is set to start trading on Nasdaq in ADR form from July 10. ADRs are securities designed to make it easy to trade shares of foreign companies in the U.S. market in dollars. The offering size is about $26.5 billion, and was assessed as one of the large deals carried out in recent months.

Cramer pointed to strong demand for memory semiconductors at present. He said the memory business has "caught fire" and said SK Hynix is worth considering for investors who can tolerate volatility.

He advised, however, that the buying approach should be cautious. Cramer said, "If you really want to buy it, start with a small weighting and leave room to add more when the stock shows weakness." That means a staggered buying strategy is more appropriate than investing a large amount at once.

Behind SK Hynix’s growth is an expansion in AI infrastructure investment. As generative AI models and data centres increase, demand has surged for high-performance memory including high-bandwidth memory (HBM). SK Hynix has secured a leading position in the HBM market and has been assessed as a key beneficiary of expanding investment in AI semiconductors.

SK Hynix shares listed on the South Korean stock market have risen about 2,550 percent since the launch of ChatGPT in November 2022, and its market capitalisation has exceeded $1 trillion. Cramer said valuation 부담 is relatively not large even after the big rise in the share price. He said SK Hynix trades at slightly above 7 times price-to-earnings based on expected results for this year, and assessed that "memory chips are selling at a high premium but the stock is trading at a discounted price."

Still, the memory industry’s structural business cycle remains a risk factor. If AI investment continues to expand, memory demand could increase, but the moment manufacturers ramp up supply quickly to catch up with demand, prices and profitability could weaken at the same time.

Cramer said the memory industry has historically repeated booms and busts, adding, "Every memory chip boom ultimately led to a memory chip bust." He said it is still hard to be sure whether AI has completely changed this traditional industry cycle.

Recent share moves also reflect such concerns. SK Hynix shares have fallen about 25 percent from their peak on June 25. Samsung Electronics and Micron also failed to avoid selling pressure across memory chip stocks despite strong results.

Cramer saw it as a positive that the stock is not trading at its peak. But he also stressed that SK Hynix is a "rollercoaster-like stock" that can fall quickly even over a short period.

SK Hynix’s Nasdaq ADR trading is meaningful in that it offers U.S. investors a new option, beyond Nvidia, to invest in growth in AI infrastructure. But in actual investing, it appears necessary to consider not only expanding HBM demand but also memory prices and rising supply, the industry cycle and short-term share volatility.