Did Samsung’s Earnings Just Wreck Global Chip Stocks? Tech Analyst Says Investors Are Totally Overreacting
A massive wave of selling hit chip stocks globally on Tuesday, completely ignoring a blowout preliminary Q2 report from Samsung Electronics, the world’s biggest memory chip maker.
Samsung’s preliminary operating profit jumped an incredible 18 times year-over-year to a record KRW 89.4 trillion ($58.44 billion). This beat the LSEG SmartEstimate of KRW 87.3 trillion, but missed some whisper numbers that were targeting as high as KRW 90 trillion.
Preliminary revenue also surged 129% year-over-year to KRW 171 trillion. While that slightly beat the average analyst estimate, it missed the most optimistic target of KRW 173.9 trillion.
A Classic "Sell the News" Cascade
Even with these massive numbers, Samsung stock tanked nearly 7% on Tuesday, dragging down the whole chip sector across Asia, Europe, and the U.S.
The Philadelphia Semiconductor Index dropped 4.65% on Tuesday alone, sitting nearly 16% below its late-June high.
Analysts say the chip sell-off was a classic "buy the rumor, sell the news" situation, since months of huge stock gains meant these strong earnings were already baked in.
Investors were also eager to lock in profits due to growing worries about whether high memory demand can last, and fears that tech giants might slow down their AI infrastructure spending.
At the same time, some pointed out that Samsung's report just wasn't mind-blowing enough, because it failed to hit the absolute top end of what some analysts were hoping for.
Mizuho Analyst: Investors are Totally Overreacting
In a research note on Tuesday, Mizuho Securities tech expert Jordan Klein argued that investors are overreacting big time to Samsung's preliminary numbers.
Klein pointed out that the chip sell-off is just a sign of fading market momentum, not worsening industry fundamentals.
He explained that while total revenue missed the highest targets, the operating profit was actually a huge beat if you strip out one-time bonus payouts.
"Samsung’s operating profit in this single quarter alone is more than it made in the last three years combined," Klein said.
He added that panic-selling based purely on a preliminary snapshot is "an exceptionally short-sighted move."
The Core Memory Business is Doing Just Fine
Klein believes the revenue miss came from slower mobile, TV, and LCD panel businesses, rather than the core memory division.
The real key for the stock price will be Samsung's actual commentary and second-half outlook, which drops at the end of July.
When it comes to pricing, Klein noted that Q3 DRAM and NAND flash indicators look incredibly strong, with some forecasts predicting NAND prices could jump 35% to 40% quarter-over-quarter.
TSMC and ASML Earnings Matter Way More
Looking ahead, Klein said that upcoming earnings from TSMC and ASML next week will matter way more for chip stocks than Samsung’s teaser print.
He is still super bullish on the long-term future of both giants and thinks their current valuations look really attractive.
On the CPU front, Klein said that positive server CPU forecasts from Asia tech analyst Dale Gai make him even more bullish on Intel, the CPU sector, and DRAM suppliers.
Meanwhile, he sees the recent dip in AMD as a great buying opportunity, especially ahead of its big AI event on July 23.