Samsung Electronics has posted preliminary second-quarter results showing operating profits surging approximately 19-fold year-on-year, driven entirely by the artificial intelligence boom’s insatiable demand for high-bandwidth memory (HBM) and advanced DRAM, yet its share price fell roughly 10% on the news.
The South Korean semiconductor giant guided for Q2 2026 sales of approximately 170 to 172 trillion won (approximately US$112 billion, or £89 billion), up from 75.7 trillion won a year earlier. Operating profit is expected to land between 89.3 and 89.5 trillion won (approximately US$58.4 billion, or £46.4 billion), compared with 4.68 trillion won in Q2 2025.
Samsung attributed the results to “technological leadership in the memory market, as well as higher average selling prices”, a reference to the pricing power the company enjoys as the world’s dominant memory manufacturer during a historic supply crunch.
A Bullwhip in the Making
The disconnect between Samsung’s headline numbers and its stock performance points to a deepening concern among investors: that the AI-driven memory boom is creating an oversupply problem in waiting.
Samsung, SK Hynix, and Micron have all announced massive capacity expansions; Samsung alone is building multiple new fabrication plants, with timelines that will bring new supply online just as the initial wave of AI infrastructure buildout may be cresting. Micron recently locked in long-term contracts at elevated prices through 2030, a move analysts interpret as an attempt to lock in bubble-era pricing before it corrects.
The sustainability of AI memory demand hinges on whether the technology companies driving it can generate meaningful returns from their investments. Recent data points suggest growing difficulties: AI customer-service projects are being wound back, AI tools have been found to harm CI/CD pipelines in software development, and enterprises report “elusive ROI” despite continued spending.
The Samsung Paradox
The profit surge positions Samsung to invest heavily in next-generation memory technologies, including HBM4 and advanced chiplet packaging. The company also recently floated plans for seaborne data centres and committed to South Korea’s national AI semiconductor strategy.
But the share price decline reflects a market that has already priced in the memory cycle’s eventual downturn. South Korea’s other memory giant, SK Hynix, also saw its stock fall alongside Samsung’s, suggesting the concern is structural, not company-specific.
“Samsung’s memory division set all-time records, and the stock goes down,” one analyst told The Register. “That tells you everything about where the market thinks we are in this cycle.”
Sources: Samsung’s profits jump 19x in a year (The Register, July 7); Samsung Electronics Q2 2026 earnings guidance (July 2026)