What’s happened: Shares of Samsung Electronics (005930.KS) fell in Asia, leading to a broader decline in chip stocks as investors took profits from an artificial intelligence-fueled rally.
What’s behind the move: The South Korean memory maker reported preliminary operating profit of about $58 billion for the April-June quarter, a 19-fold jump from last year and beating analysts’ expectations.
Despite the impressive earnings, Samsung shares fell 10% in Seoul as investors booked profits after the stock had risen nearly 150% this year.
“Results were ‘only’ 6% ahead of forecasts and this appears to have led to a surge in profit taking,” Deutsche Bank analysts wrote on Tuesday morning.
David Morrison, senior market analyst at Trade Nation, said: “Investors appear to be concerned that semiconductor and other artificial intelligence stocks may struggle to maintain such high levels of sales and earnings in the future.”
Shares of US memory chip maker Micron (MU) fell more than 6% in premarket trading. Memory and storage capacities of Sandisk (SNDK) and Western Digital (WDC) also fell.
What else you need to know: Investors have been closely watching Samsung’s results as the company, along with peers SK Hynix (000660.KS) and US Micron, has emerged as a leader in artificial intelligence.
A critical bottleneck in the supply of high-bandwidth memory for data center chips has sent shares of major manufacturers soaring this year, with Wall Street seeing supply constraints well into 2027.
Samsung remains the world’s largest memory manufacturer, leading the way in DRAM and NAND flash memory.
Samsung, SK Hynix and Micron topped a $1 trillion valuation in May but then retreated amid growing fears that the AI trade could be in a bubble.
Ines Ferre is a senior business reporter for Yahoo Finance covering the U.S. stock market, publicly traded companies and commodities.
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