On July 7, Samsung Electronics announced a second-quarter operating profit of ₩8.9 trillion (approximately $6.4 billion USD), surpassing the market consensus of ₩8.4 trillion. This marked a 19-fold (1,800%) surge compared to the same period last year, primarily driven by robust demand for high-bandwidth memory chips crucial for AI data centers. Despite these record-breaking results, the company's shares experienced a significant drop.
Following the earnings announcement, Samsung Electronics' stock plunged 5.82% to ₩299,500 by 10:00 a.m. KST, ultimately falling over 8% in early trading. This decline was attributed to a "sell-on-the-news" phenomenon, where investors engaged in profit-taking after the positive news. Analysts like Kim Suk-hwan of Mirae Asset Securities noted that excluding bonuses, Samsung's operating profit could be estimated around ₩10 trillion, making it the largest ever, yet selling pressure dominated. SK Hynix also saw its shares fall by 3.80% initially and later over 8%, impacting the broader semiconductor sector.
The decline in these major chipmakers had a substantial ripple effect on the South Korean market. The KOSPI index, heavily weighted by these tech giants, plunged more than 4%, opening down 1.64% and extending losses to 4.34% by 10:00 a.m. Around 10:23 a.m., a sell-sidecar (a temporary trading halt) was triggered due to the sharp market fall, which ultimately saw the KOSPI retreat by 6.7% for the day. Foreign investors were significant net sellers, offloading over ₩1 trillion on the KOSPI for the 13th consecutive trading day, while institutions also net sold over ₩200 billion. Only individual investors were net buyers, purchasing ₩1.3 trillion worth of shares.
Investors are increasingly questioning the sustainability of the AI boom and its impact on tech stock valuations, leading to a rotation out of high-flying tech stocks into other sectors. Mark Cranfield, a markets live strategist at Bloomberg, observed that the previous "one-sided view that everything touching AI themes is a sure win" is no longer prevalent. This sentiment, combined with concerns about rising capital spending, intensifying competition, and expanding capacity, fueled the widespread profit-taking across Asian markets, causing the MSCI Asia Pacific Index to retreat by 1.2%.
