Samsung, SK Hynix smash profit records but stocks slide on AI sustainability fears

The two dominant forces in the global memory chip industry delivered record-breaking quarterly results this week, yet failed to calm investor anxiety over the sustainability of the AI spending boom that powered their earnings.

Record Profits Amid a Market Rout

Samsung Electronics reported an operating profit of 89.5 trillion won for the June quarter, up 1,814% year on year, on revenue of 171.5 trillion won. SK Hynix ↘ 3.12% posted operating profit of 60.5 trillion won, a 557% increase from a year earlier. Together, the two companies — which account for roughly 80% of global memory revenue — generated a combined 150 trillion won ($104 billion) in operating profit in a single quarter.moneycontrol+5

SK Hynix alone is projected to earn more in profits this full year than it accumulated in the prior 27 years combined. Yet its stock slumped roughly 10% after results missed analyst forecasts of 64 trillion won, extending a brutal selloff that began earlier in July.reuters+2

Long-Term Contracts Signal Structural Shift

Executives at both companies sought to reassure investors by pointing to a growing portfolio of multiyear supply agreements. Samsung disclosed that some customers are signing binding five-year contracts with "substantial" advance payments, and that it has sealed agreements with the top five global data center customers. SK Hynix has locked in deals with around 10 major customers.moneycontrol

Samsung warned that memory shortages will persist through 2028, while SK Hynix's leadership projected constraints extending beyond 2030. SK Hynix is earmarking at least 45 trillion won ($31 billion) in capital spending this year, up 50% from a year earlier.reuters+1

According to CNBC, Samsung said the chip crunch will last until at least 2028 as every new generation of Nvidia ↘ 1.47% graphics processors requires faster access to more data.cnbc

Investors Remain Skeptical

Despite the record numbers, both stocks have been caught in a wider semiconductor selloff. SK Hynix shares suffered their steepest single-day decline on record earlier in July after their Nasdaq debut cooled, and Samsung shed about 7% following its preliminary results. The broader chip rout also dragged AMD Advanced Micro Devices, Inc. ↘ 1.47%, Intel ↘ 1.02%, and Micron ↘ 2.22% lower.reuters+3

"Samsung has beaten the numbers, but the skepticism may stay," said Josh Gilbert, Etoro's lead analyst for APAC. "Investors are already looking beyond the current shortage and asking whether aggressive capacity expansion could eventually create the next oversupply cycle".moneycontrol

The memory industry's history of brutal boom-and-bust cycles looms over the current supercycle thesis. Whether multiyear contracts and AI-driven demand can break that pattern remains the central question for investors watching both companies post numbers that, by any historical standard, are extraordinary.