AI Stocks Slide Despite Samsung’s Blockbuster Profit Forecast as Investor Doubts Grow

Global technology stocks came under heavy selling pressure on Tuesday after investors shrugged off Samsung Electronics’ blockbuster profit forecast, sparking renewed concerns that the artificial intelligence-driven rally in semiconductor shares may have run ahead of underlying fundamentals.

Samsung Electronics projected a 19-fold increase in second-quarter operating profit, driven by surging demand for advanced memory chips used in artificial intelligence data centres. The company estimated operating profit at 89.4 trillion won (about $58 billion), comfortably exceeding analysts’ expectations and marking another record quarter for the South Korean technology giant.

Despite the impressive earnings outlook, Samsung’s shares fell sharply, dropping nearly 7% by the close of trading after falling as much as 10% during the session. Investors appeared to take profits following the stock’s massive rally earlier this year, with many questioning whether the extraordinary pace of AI-related earnings growth can continue.

The sell-off quickly spread across global semiconductor markets. In South Korea, the benchmark KOSPI index plunged nearly 5%, triggering temporary trading halts as semiconductor heavyweights weighed on the broader market. Rival memory-chip maker SK Hynix also suffered steep losses, while chip-related stocks across Japan and Taiwan declined as investors reassessed valuations in the AI sector.

The weakness extended to Wall Street, where AI-linked companies dragged major U.S. indexes lower. The technology-heavy Nasdaq Composite fell more than 1%, while the S&P 500 also slipped despite gains in several non-technology sectors. Shares of Nvidia, Micron Technology, Intel, and other semiconductor companies declined as investors questioned whether the rapid expansion of AI infrastructure spending can be sustained over the long term.

Analysts noted that Samsung’s earnings were not the problem. Instead, the market reaction reflected exceptionally high expectations after months of explosive gains in AI-related stocks. With many semiconductor companies having already doubled or tripled in value this year, investors are increasingly demanding stronger forward guidance and evidence that current pricing power can be maintained.

Adding to the cautious sentiment were reports that Chinese AI startup DeepSeek is developing its own artificial intelligence chip, potentially reducing its dependence on products from Nvidia and other established chipmakers. The news heightened concerns that competition in the AI semiconductor market could intensify in the coming years, placing pressure on margins and future earnings growth.

Market strategists also pointed to broader macroeconomic risks, including geopolitical tensions in the Middle East, rising oil prices and persistent inflation concerns, all of which have made investors more cautious toward richly valued technology shares. While demand for AI hardware remains robust, traders increasingly believe that future gains will depend on whether companies can continue delivering exceptional earnings rather than simply meeting already lofty expectations.

Even so, many analysts remain optimistic about the long-term outlook for artificial intelligence and advanced semiconductor technologies. They argue that demand for high-bandwidth memory chips, AI accelerators and data-centre infrastructure continues to expand rapidly. However, Tuesday’s market reaction underscores a new reality for the sector: exceptional results alone may no longer be enough to satisfy investors after one of the strongest technology rallies in recent years.