What happened: Samsung Electronics (005930.KS) stock slumped in Asia, leading a broader decline in chip stocks as investors took profits from the AI-fueled rally.
**What's behind the move: **The South Korean memory maker reported a preliminary operating profit of about $58 billion for the April–June quarter, marking a 19-fold jump from a year ago and exceeding analyst expectations.
Despite the impressive earnings, Samsung stock fell as much as 10% in Seoul as investors locked in profits after the shares had surged nearly 150% this year.
"Results were 'only' 6% ahead of estimates, and it seems to have brought in a bout of profit taking," Deutsche Bank analysts wrote on Tuesday morning.
David Morrison, senior market analyst at Trade Nation, noted, "It seems that investors are concerned that semiconductor and other AI-adjacent stocks may struggle to maintain such high levels of sales and margins going forward."
Shares of US-based memory chip maker Micron (MU) sank more than 6% in premarket trading. Memory and storage plays Sandisk (SNDK) and Western Digital (WDC) also fell.
**What else you need to know: **Investors were closely watching Samsung's results as the company, along with peers SK Hynix (000660.KS) and US-based Micron, has become a bellwether for the AI trade.
A critical bottleneck in the supply of high-bandwidth memory for data center chips has sent shares of the major manufacturers soaring this year, with Wall Street seeing supply constraints well into 2027.
Samsung remains the world's largest memory manufacturer, leading in both DRAM and NAND flash production.
Samsung, SK Hynix, and Micron topped a $1 trillion valuation in May before pulling back amid growing concerns that the AI trade may be in a bubble.
Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance