Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
The selloff in semiconductor stocks worsened in early July as shares in Samsung Electronics tumbled, despite a very optimistic earnings report.
Shares of the electronics giant were off 6.25% Wednesday, July 8 on the South Korean stock market (the company does not trade on major American markets). That followed a steep 8% dive the previous day.
Must Read
-
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
-
JPMorgan still sees gold hitting $5,000/oz by Q4 — and savvy investors are protecting their wealth with a tax-advantaged Gold IRA. Learn more with a free guide from Priority Gold
-
The tax breaks in Trump’s ‘big beautiful bill’ expire after 2028 — and experts say most people won’t act in time. What to do before the window closes
That decline, and the continued fall, came despite a company announcement that it expects operating profit to jump 1,800% with quarterly profits besting both Apple and Nvidia (1).
This is another dive for Samsung stock in the past month. In late June, shares fell 12% (rival chipmaker SK Hynix was down an equal amount that day). That triggered a 20-minute trading halt by the exchange operator.
“It’s unnerving that you’re seeing this kind of volatility,” Alexander Redman, chief equity strategist at the brokerage CLSA, said at the time (2). “It just feels very, very frothy.”
Big earnings, but not big enough
Samsung reported a preliminary operating profit of about $58 billion for the April–June quarter. That was 6% above analyst expectations (3). Normally, that would cause the stock to surge, but expectations in the artificial intelligence space are sometimes unreasonably high.
Some investors could also have been taking profits. Despite Wednesday’s drop and the decline in June, Samsung shares are up 116% year to date — and more than 350% in the past year.
The Samsung selloff had ripple effects throughout the sector. SK Hynix was down just under 5% that same Tuesday and another 6% Wednesday in South Korea. U.S. memory makers also saw losses, but regained strength in early trading the following day.
As of mid July, Samsung stock has continued to slip despite a brief recovery on the 15th (4).
Is the bubble about to pop?
Artificial intelligence has become Wall Street’s biggest growth story and a global powerhouse, helping propel many of the largest tech companies to record-breaking valuations. Companies tied to AI have added trillions of dollars in market value over the past few years.
