Despite Record Earnings, Samsung Electronics Stock Plunges 9.75%; Foreign Investors Net Sellers for 13th Straight Day

Samsung Electronics' stock price plummeted 9.75% despite posting the largest earnings in its history. Samsung Electronics recorded sales of 171 trillion won and an operating profit of 89.4 trillion won in the second quarter of this year, representing increases of 129.3% and 1810.3%, respectively, compared to the same period last year. This operating profit ranks first among global companies, surpassing Nvidia and Apple.

On the 8th, foreign investors net sold 3.3601 trillion won on the KOSPI, extending their selling streak for the 13th consecutive day since the 19th of last month. Large-scale selling by foreigners has entrenched the market's downward trend, and the drop was exacerbated by amplified supply-demand feedback from Samsung-related single-stock leveraged ETFs. Institutions also net sold 220.3 billion won, while individual investors net purchased 3.5053 trillion won to defend the downside.

Kang Jin-hyuk, a senior researcher at Shinhan Investment Corporation, diagnosed that preemptive profit-taking selling emerged centered on investors concerned about a peak amidst record-level profits. Kim Seok-hwan, a researcher at Mirae Asset Securities, also cited profit-taking by foreigners as a key cause of the stock price adjustment. Although Samsung Electronics has recorded 16 earnings surprises since 2019, the stock price fell on the announcement day in 10 of those instances. Skepticism regarding the slowing of the artificial intelligence investment cycle has dampened investor sentiment across the semiconductor sector.

Samsung Securities stated in an urgent market report that the adjustment following a short-term surge is a natural phenomenon and that the current cycle is ongoing. The securities industry believes it is too early to say that the current AI investment cycle has peaked. Samsung Securities analyzed that the earnings announcements by U.S. big tech firms scheduled for the end of this month will serve as a key inflection point for memory semiconductor stocks.