Via news.samsungsemiconductor.com
Record profits couldn't save Samsung from a broader selloff driven by AI spending doubts and rising Chinese competition
Samsung Electronics shares took a beating, dragging the broader memory chip sector down with it. Shares fell up to 10% on July 7 and over 13% on July 28, with peers also posting notable losses as investors reassessed the AI-fueled rally that had powered these names to extraordinary heights earlier in the year.
The selloff is striking given Samsung’s recent financial performance. The company’s operating profit surged roughly 1,800% year-over-year for the second quarter of 2026, landing somewhere in the range of $59B to $62B.
A sector-wide reckoning #
Samsung wasn’t alone in the downturn. Memory stocks including SK Hynix and Micron have all fallen more than 20% from their recent highs, putting the entire subsector firmly in bear market territory by early July 2026.
Samsung shares alone had climbed roughly 150% to 200% year-to-date by July, powered by insatiable demand for AI-related memory products. Capacity was reportedly sold out through 2027.
Analysts pointed to results that were only modestly ahead of already elevated estimates, a dynamic that tends to trigger profit-taking after extended rallies.
The ripple effects were immediate and severe for South Korea’s benchmark index. Samsung alone frequently accounts for over 25% of the KOSPI index, and together with SK Hynix, the two companies represent a dominant share of the gauge. On the worst-affected days in July, the KOSPI plummeted by as much as 11.5%.
The twin threats: China and capex fatigue #
Two specific concerns have been gnawing at investor confidence in the memory space. The first is competitive. CXMT, a Chinese DRAM manufacturer, has been making moves into a market long dominated by the Samsung-SK Hynix-Micron oligopoly.
The second concern involves major hyperscalers — the cloud giants whose spending has been the oxygen supply for the entire AI hardware ecosystem — facing growing scrutiny over whether their capital expenditure levels are sustainable. The question is whether the revenue those investments generate will justify the outlays.
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