(Bloomberg) -- Morgan Stanley analysts upgraded SK Hynix Inc. to equal-weight form underweight, saying they mistimed their downgrade last September as the stock has since rallied on optimism about the company’s prospects in supplying cutting-edge memory chips.

“Our call was predicated on the stock repeating prior cyclical underperformance and facing a more competitive HBM environment into 2025, which has not materialized,” analysts including Shawn Kim wrote in a note Tuesday, referring to high-bandwidth memory chips.

The Wall Street bank’s downgrade of the South Korean chipmaker sparked much controversy, with the nation’s financial watchdog reviewing the case and whether the US firm complied with regulations. The analysts later said they were wrong in their assessment and raised the stock’s price target.

SK Hynix’s shares have jumped 18% this year, bucking a broader retreat in artificial intelligence-related stocks globally due to a repricing of the technology’s costs after the emergence of China’s DeepSeek AI model. The stock’s performance has been driven by “favorable pricing trends from the spot market and a cycle inflection in sight,” Morgan Stanley analysts wrote.

“While no cycle is necessarily the same, history suggests we should be careful about ‘jumping the gun’ — the reason we moved to equal-weight and not overweight,” the analysts said.

They raised the stock’s price target by 53% to 230,000 won to reflect higher sustainable return on equity, driven by prolonged high-bandwidth memory market share over the long term.