AI chip stocks tumble despite Samsung's record profit surge

South Korean chip‑maker Samsung Electronics reported a 19‑fold jump in second‑quarter operating profit, yet its shares fell sharply on Tuesday, dragging a raft of AI‑related chipmakers lower across Asia and the United States. The paradox highlights growing investor scepticism that the recent AI‑infrastructure boom may already have priced in most of the upside.

Samsung guided Q2 operating profit to 89.4 trillion won, or about $58.4 billion, up from 4.7 trillion won a year earlier and ahead of the LSEG SmartEstimate cited by Reuters. Revenue climbed to 171 trillion won from 133.9 trillion won in the prior quarter, fuelled by “strong AI memory demand”. Despite the blowout, the stock slid roughly 7 % in Seoul, while the broader Kospi slipped nearly 5 % and rival memory producer SK Hynix fell around 6 %.

"Samsung's earnings were widely expected and largely priced in after the stock's rally."

Albert Yong, Petra Capital, via Finance

The weakness spilled into the United States. Micron Technology fell close to 5 % in pre‑market trade, Western Digital lost about 7 %, Seagate dropped nearly 6 %, and SanDisk slipped roughly 5 %. Heavyweights Nvidia, AMD, Marvell, Intel, Lam Research, Applied Materials and ASML also traded lower, extending a broader sell‑off in AI‑related semiconductor names.

In the broader market, the Nasdaq Composite lost 310.06 points, or 1.19 %, to finish at 25,811.10. The S&P 500 fell 34.07 points, or 0.45 %, to 7,503.36, while the Dow Jones Industrial Average slipped 140.30 points, or 0.26 %, to 52,915.61. The drop marked the latest bout of volatility among memory chipmakers and other AI‑related stocks as investors weigh whether the build‑out of AI data centres has left shares overpriced.

Reuters, citing the same sell‑off, noted that the market’s reaction to Samsung’s “blowout earnings report” stemmed from “mounting doubts about the sustainability of Wall Street’s AI‑driven rally.” The report added that both Micron and SanDisk pulled the PHLX chip index lower, underscoring how a handful of large‑cap names can shift market sentiment.

"The story of today is the story of the last few weeks, and that's rotation after the blistering run in the AI buildout, semis and memory. Expectations have gotten to be almost impossible to beat for these companies,"

Zachary Hill, head of portfolio management, Horizon Investments, via Aol

Adding to the unease, Reuters reported that Chinese startup DeepSeek is developing its own AI chip, a move that could lessen reliance on Nvidia and Huawei silicon. The development points to a widening competitive set that may temper demand for the memory and inference products that underpinned Samsung’s quarterly surge.

Investors also have an upcoming catalyst on Friday: South Korean giant SK Hynix’s U.S. Listing is set to begin trading on the Nasdaq. The debut will be the first major South Korean memory chip firm to list in the United States and could provide a fresh gauge of market appetite for the sector after the Samsung episode.

Elsewhere in the market, SpaceX’s first day of trading as part of the Nasdaq‑100 was marked by a decline, reflecting the broader risk‑off tone that spilled over from chip stocks. Oil prices rose after reports of attacks on vessels near the Strait of Hormuz, a reminder that geopolitical shocks can quickly intersect with technology‑driven narratives.

Financial services firm Fiserv climbed after media reports that it held discussions with U.S. Banks, including JPMorgan and Bank of America, to sell its payments infrastructure business. The news showed that while chipmakers faced pressure, other segments of the broader technology ecosystem continued to generate headlines.

On the macro front, the U.S. Federal Reserve will release the minutes of its latest meeting on Wednesday, the first under new Chair Kevin Warsh. Markets will scan the minutes for clues about the central bank’s stance on inflation and growth, variables that can shape risk appetite for high‑growth sectors such as AI‑related semiconductors.

Overall, Samsung’s record operating profit has not insulated the company from a market that now demands more than headline‑level earnings. The combination of a sharp stock slide, a broad pullback across memory and AI chip names, and the emergence of new competitive threats creates a complex backdrop for investors trying to balance upbeat company fundamentals with heightened expectations.

What to watch next: Friday’s SK Hynix Nasdaq debut, the Federal Reserve minutes on Wednesday, and any further developments from DeepSeek or other AI‑chip startups. Together, these events will help define whether the AI‑driven rally can sustain its momentum or whether the sector will settle into a more measured growth path.