Samsung’s record profit fails to halt broad AI chip selloff

Samsung Electronics reported a 19-fold jump in second-quarter operating profit on Tuesday, yet the blowout results paradoxically fueled a sharp selloff across semiconductor stocks as investors weighed whether the AI chip boom has peaked.

Record Earnings Meet Market Skepticism

The South Korean tech giant estimated April-June operating profit at 89.4 trillion won (roughly $58 billion), up from 4.7 trillion won a year earlier, according to a regulatory filing released Tuesday. Revenue more than doubled to approximately $112 billion. The results surpassed the combined profits from 2024 and 2025, according to The New York Times.news.samsung+2

Yet Samsung shares closed nearly 7% lower in Seoul on Tuesday. Investors appeared to treat the record as a ceiling rather than a floor for AI-driven chip demand.cnbc+1

Chip Stocks Dragged Into Bear Market

The selling cascaded across U.S. markets on Monday (July 7). The Philadelphia Semiconductor Index fell more than 6% intraday. Intel ↘ 2.24% dropped 9.7%, AMD Advanced Micro Devices, Inc. ↘ 0.49% fell 6.5%, and Micron ↗ 0.25% declined 4.7%. Western Digital ↗ 0.29% and SanDisk shed over 7% each. Astera Labs ↗ 3.32% fell more than 10%, compounded by disclosure of insider stock sales by its board chairman.tradingkey+4

The Nasdaq Composite fell 302 points, or 1.2%, while memory stocks including Micron, Samsung, and SK Hynix all dropped more than 20% from recent closing highs — formally entering bear market territory, according to Yahoo Finance. The sector has shed roughly $1.5 trillion in market value since June 25.finance.yahoo+1

Morgan Stanley Calls the Peak

Morgan Stanley ↘ 1.64% added fuel to the downturn with a July 6 client note recommending investors reduce exposure to Samsung, SK Hynix, and Micron, arguing that "the narrow rise centered on semiconductors is ending and market-led stocks are gradually spreading". The firm suggested rotating toward sectors with broader growth potential.mk+1

Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.56% data showed hedge funds had already been selling tech hardware stocks for four consecutive weeks heading into the earnings release.reuters

By Wednesday morning in Seoul, Samsung and SK Hynix shares rebounded modestly, with SK Hynix climbing as much as 5.8%, suggesting some investors viewed the selloff as overdone. But the episode underscored how sensitive markets have become to any hint that the AI spending cycle could be approaching its limits.wmbdradio