Samsung Electronics shares fell sharply after investors concluded that record AI chip profits were not enough to calm oversupply jitters.
According to the Financial Times Samsung Electronics shares tumbled as much as 10 per cent on Tuesday, despite the chipmaker boasting a third straight quarter of record operating profit. The slide showed investor nerves about returns on vast AI spending.
The world’s largest memory chipmaker by sales forecast operating profit of Won89.4tn, about €50.6bn, for the second quarter. That was 19 times higher than a year ago, as demand for AI kept memory chip prices painfully high.
The figure topped Samsung Electronics’ profit for all of 2025 and narrowly beat analysts’ expectations of Won87.3tn, about €49.4bn, according to LSEG SmartEstimate. Sales at the South Korean company were estimated to more than double from a year earlier to Won171tn, about €96.9bn.
Memory chip producers have been among the biggest winners from the AI infrastructure splurge. Samsung’s shares have more than doubled this year, lifting its market capitalisation above $1tn.
But chip stocks are wobbling as aggressive expansion plans raise fears of future oversupply. Reports that Meta plans to sell excess computing capacity to external customers as part of a cloud push have not helped.
Samsung’s shares closed down 8 per cent, part of a wider sell-off among chipmakers on Tuesday. SK Hynix fell 7 per cent, while Japan’s Kioxia slipped 11 per cent.
South Korea’s Kospi, heavily shaped by Samsung and SK Hynix, fell as much as 8 per cent and triggered a trading halt. The index closed down 5 per cent, though it remains more than 80 per cent higher this year.
Saxo chief investment strategist Charu Chanana wrote: “Samsung’s results showed that AI-driven memory demand remains powerful, but the share price reaction suggests investors now need strong guidance, durable pricing power and confidence that demand is not peaking.”
Samsung and SK Hynix are leading suppliers of high-bandwidth memory chips used in AI data centres. Their focus on higher-margin HBM products has squeezed the supply of conventional memory chips used in consumer electronics.
Average selling prices for DRAM chips, which temporarily store data, and NAND chips rose 44 per cent and 53 per cent, respectively, in the second quarter from the previous three months, according to Citi.
Nomura expects commodity DRAM and NAND prices to rise by a further 25 per cent and 24 per cent this quarter. It points to stronger demand from consumer electronics and data centres.
Despite wider margins, Samsung said total operating profit was reduced by provisions for employee bonuses. The company reached a deal with its labour union in late May to pay a 10.5 per cent bonus on the chip division’s operating profit.
Analysts expect supply shortages to persist into next year. Some investors are getting twitchier about whether large technology companies can keep pouring money into AI infrastructure at the current pace.
JPMorgan said investors were increasingly questioning whether AI memory’s share of cloud service providers’ capital expenditure could last. It estimated the figure at 52 per cent this year and more than 70 per cent next year.
Samsung and SK Hynix have said they plan to invest a combined $2tn to expand chip production in South Korea. Samsung’s investment will run from 2026 to 2040, while SK Hynix has not disclosed a timeline.
SK Hynix kicked off marketing on Monday for its near-$30bn US listing to help fund expansion. Its American depositary receipts are due to begin trading in New York on Friday.
