South Korean tech giant Samsung Electronics has released its second-quarter operating profit forecast at 89.4 trillion won (approximately $58.4 billion). This is 19 times higher than a year ago and marks the third consecutive record quarter. The figure exceeded analysts' consensus forecasts: for instance, the LSEG SmartEstimate was 87.3 trillion won, while FnGuide projected 84.4 trillion won. Revenue, according to the company's estimates, will grow by 129% year-on-year to reach 171 trillion won, although this fell slightly short of market expectations of 173.3 trillion won.
Artificial Intelligence as a Chip Driver
The main engine behind this explosive growth is unprecedented demand for memory chips, fueled by the artificial intelligence boom. According to Citi Research, DRAM prices surged by 44% over the quarter, while NAND flash prices rose by 53%. Analysts attribute this to a shift in investments toward AI infrastructure: active production of chips like HBM (High Bandwidth Memory) has significantly constrained the supply of standard modules for smartphones, PCs, and servers. The shortage effectively supports high selling prices and forces major clients to sign long-term supply contracts.
Notably, in May, Samsung reached an agreement with employees of its semiconductor division: their bonuses are now directly tied to operating profit. Excluding these payments, according to expert estimates, the company's operating profit could have exceeded 100 trillion won.
Why Are Shares Falling?
Despite the phenomenal earnings report, Samsung's shares plunged more than 6% at the start of trading, continuing a correction after a fivefold increase over the past year. The reason is simple but telling: massive profit-taking. Investors, who multiplied their capital fivefold over 12 months, chose to lock in gains without waiting for further price movement.
Additionally, the market is concerned about unevenness in the chip sector. Fears of a memory oversupply have hit some suppliers, while Micron's growth amid AI supported the stock prices of other companies. This divergence has only amplified warnings about the so-called "AI bubble": some investors doubt the sustainability of the rally. Although Samsung has pledged to invest 2,100 trillion won in the country's economy by 2040, the investment timeline will be adjusted based on market conditions.
My professional opinion: The drop in Samsung's shares on a strong report is a classic example of the "buy the rumor, sell the fact" principle. However, the fundamental drivers (capacity shortages, long-term contracts, and the AI boom) have not disappeared. The main risk is a potential slowdown in data center spending, but for now, demand for memory remains robust, and building new factories takes years. The correction may be short-lived, and for long-term investors, this could be an entry point.