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Shares of Samsung Electronics tumbled nearly 10% on Tuesday, dragging South Korea's benchmark KOSPI down more than 8%, even after the world's largest memory chipmaker reported one of the strongest quarters in its history.
Samsung Electronics has overtaken Nvidia to become the world’s most-profitable technology company after reporting a record quarterly operating profit of 89.4 trillion won ($58.6 billion).
By the numbers:
- Revenue surged 129% to 171 trillion won, more than doubling from the same period last year.
- A year ago, Samsung's quarterly profit stood at just 4.7 trillion won.
- Profit reached 89.4 trillion won ($58.4 billion) for the April-June quarter, beating market estimates of 87.3 trillion won.
- Operating profit skyrocketed 1,800% year-on-year, rising nearly 19-fold from last year.
Even more notably, these results already account for one-off employee bonus expenses.
Why did the stock still fall: despite the blockbuster numbers, investors focused less on Samsung's past performance and more on what comes next.
Samsung has been one of the biggest beneficiaries of the AI boom. As companies raced to build AI data centres, demand for memory chips surged, allowing Samsung to sell its chips at much higher prices and significantly boost profits.
But investors now fear that pace may not last.
Building AI infrastructure requires massive investments in data centres, power supply and chip manufacturing capacity. Any slowdown in those investments could eventually reduce demand for memory chips, hurting future earnings across the semiconductor industry.
Analysts also noted that Samsung's strong results had already been priced into the stock after a sharp rally in recent months, prompting investors to lock in profits.
The bigger picture: the sell-off quickly spread across Asian markets.
Samsung shares ended the day down nearly 7%, while rival SK Hynix fell around 6%. The broader KOSPI index dropped more than 8%, and Japan's Nikkei 225 declined 3.6% as investors booked profits across AI and technology stocks.
The sharp reaction highlights a broader shift in market sentiment. Investors are no longer rewarding AI-linked companies solely for strong earnings, they are increasingly questioning whether future AI demand can continue to justify the sector's lofty valuations
