On Tuesday, semiconductor stocks faced significant declines after Samsung Electronics reported quarterly profits that, while exceeding those of Nvidia and Apple, failed to meet Wall Street's high expectations for artificial intelligence demand. Samsung's shares fell 8%, even as it projected an astonishing 1,800% increase in operating profit.
This reaction underscores a broader trend where even strong earnings reports can lead to stock selloffs if they do not align with investor expectations, particularly in the context of the AI boom. The selloff affected the broader market, with Korea's Kospi index dropping about 5% and SK Hynix shares declining 7% ahead of its upcoming Nasdaq listing, which aims to raise $28 billion.
U.S. memory makers, including Sandisk and Micron Technology, also saw their stocks drop by 8% and 5%, respectively. This downturn may reflect a recalibration of expectations following a significant rise in memory prices driven by high demand, which has led to substantial stock price increases for companies like Micron and Sandisk this year.
However, concerns are mounting that AI spending may not sustain the high memory prices, prompting companies like Apple and Microsoft to raise product prices. Additionally, news that Chinese AI startup Deepseek is developing its own chip to avoid U.S. export restrictions and reduce reliance on Nvidia further contributed to the negative sentiment in the sector