[E-Daily Reporter Park Sun-Yeop ] An analysis suggests that the sharp drop in SamsungElectronics(005930)’s stock price—despite the company posting its best-ever quarterly earnings—was not due to an earnings shock, but rather the result of a combination of heightened expectations and concentrated supply and demand. While concerns about the memory market peaking have grown, the analysis concludes that there is still insufficient evidence to confirm an actual supply glut or a slowdown in artificial intelligence (AI) demand.
Lee Jae-won, an analyst at Yuanta Securities Korea, stated in a report on the 8th, “The key reason for the sharp decline following SamsungElectronics’ earnings announcement was not an earnings shock, but rather a failure to meet expectations,” adding, “The critical question now is not whether to sell semiconductors, but whether AI capital expenditures (CAPEX) have actually declined.”

SamsungElectronics’ preliminary second-quarter results reached record highs, with revenue of 171 trillion won and operating profit of 89.4 trillion won. Yuanta Securities Korea estimated that, taking into account provisions for special performance bonuses, actual operating profit likely exceeded 100 trillion won. This figure also surpassed the official operating profit consensus of 84.6 trillion won by about 6%.
Nevertheless, on the day the earnings were announced, the stock prices of both SamsungElectronics and SK hynix(000660) plummeted, and a circuit breaker was triggered in the KOSPI market during trading hours. The analyst noted, “The absolute earnings figures themselves were good,” adding, “The problem is that market expectations had risen too high, and the semiconductor sector’s weight within the Korean market had become too large.”
Immediately before the earnings announcement, many analysts had projected SamsungElectronics’ operating profit to exceed 90 trillion won, and some market participants expected profits of around 100 trillion won, excluding provisions for performance bonuses. Revenue also fell slightly short of the consensus estimate of 174.5 trillion won. The explanation is that, with the earnings improvement already priced into the stock price, the preliminary earnings announcement served not as a catalyst for new buying but as a pretext for profit-taking.
Supply-demand pressures were also significant. On the 7th, SK hynix and SamsungElectronics ranked first and second, respectively, among the top 10 KOSPI stocks by trading volume, and four leveraged and inverse products tied to SamsungElectronics and SK hynix were included in the list. According to Yuanta Securities Korea, since the launch of single-stock leveraged ETFs, the daily price volatility (high-to-low) for SamsungElectronics and SK hynix has widened to 7.1% and 8.6%, respectively. These figures are significantly higher than the 4.4% and 5.1% recorded prior to the launch.
However, the analyst noted that it is difficult to conclude that this sharp decline marks the end of the memory cycle. This is because increasing memory supply requires prior progress in areas such as cleanrooms, power, equipment lead times, process transitions, yield stabilization, and resolving HBM packaging bottlenecks, making it difficult to scale up in the short term. Additionally, AI-oriented memory has higher barriers to entry than general-purpose DRAM in terms of customer-specific specifications and supply stability.
He explained, “To speak of an oversupply, we need to see confirmation of the actual pace of capacity expansion, customer inventory buildup, renegotiation of long-term supply agreements (LTAs), and stabilization of HBM yields,” adding, “What we are currently seeing is, in fact, a deepening supply shortage.” He noted that the assessment that memory demand fulfillment rates for customers remain at only 50–60% and Apple’s price hikes also support a supplier-dominated market environment.
From a valuation perspective, it is also difficult to justify a sell-off. According to Yuanta Securities Korea, based on the closing price on the 7th, the KOSPI’s 12-month forward price-to-earnings ratio (PER) fell to 6.97x, reaching levels last seen during the financial crisis. The analyst stated, “While we cannot advocate buying based solely on a low PER, a sell-off at current valuation levels is excessive given the ongoing supply shortages and sustained AI capital expenditures (CAPEX).”
Strategically, the analyst suggested that conditionally increasing exposure in stages is more effective than joining the sell-off. The conditions for doing so include a reduction in the intensity of net foreign selling in the spot market, support at the 60-day moving average, the maintenance or upward revision of AI CAPEX guidance following the Q2 earnings announcements by hyperscalers in late July, and an upward revision of KOSPI earnings estimates.
The analyst noted, “The shock stemmed not from actual earnings but from expectations and market positions,” adding, “Since there is no evidence that AI CAPEX has declined and valuations are at historic lows, there is little reason to join the panic.” He added, “This is a period to explore opportunities to increase the allocation to large-cap semiconductor stocks while awaiting a slowdown in the intensity of foreign selling, confirmation of hyperscalers’ CAPEX guidance, the listing of SK hynix ADRs, and improvements to the single-stock leveraged ETF system.”