TLDR
- South Korea’s KOSPI fell 4.9%, triggering circuit breakers for the sixth time this year
- Samsung forecast a 19-fold jump in Q2 operating profit but shares still dropped nearly 7%
- Analysts say AI earnings expectations have grown too high to sustain further gains
- Retail investors bought the dip, purchasing 3.2 trillion won in shares
- SK Hynix launched a $28 billion US share sale, drawing early investor interest
South Korea’s stock market had a rough Tuesday. The KOSPI benchmark index closed down 4.9%, finishing at 7,656.31. At its lowest point during the day, it had fallen over 8%.
Circuit breakers were triggered, halting trading temporarily. It was the sixth time this happened in 2025 during periods of high volatility in chip stocks.
Samsung’s Big Numbers Weren’t Enough
Samsung Electronics was at the center of the selloff. The company forecast a second-quarter operating profit of 89.4 trillion won, roughly $58 billion. That’s a 19-fold increase from the same period last year and its third straight record quarter.
Despite that, Samsung shares fell nearly 7% on the day. At one point they were down more than 10%.
Analysts say the results were already baked into the stock price. “Market expectations have grown too high to be raised further,” said Seo Sang-young from Mirae Asset Securities.
Peer chipmaker SK Hynix fell 6.1%. Japanese memory chip maker Kioxia dropped more than 10%.
The KOSPI had more than doubled this year, hitting a record high in late June. Since then it has shed around 20%.
AI Rally Enters a New Phase
The market reaction signals a shift in how investors are thinking about AI stocks. For months, chip companies were rewarded simply for beating earnings expectations. That dynamic appears to be changing.
“Strong earnings are no longer enough,” wrote Charu Chanana of Saxo Markets. She said investors now want strong earnings, strong guidance, and proof that pricing power can last.
Albert Yong of Petra Capital Management said the plunge suggests investors are focused on the longer-term path of the memory cycle, not just recent results.
Foreign investors sold 2.9 trillion won worth of Korean shares on Tuesday. Retail investors stepped in and bought 3.2 trillion won, helping the index recover some of its early losses.
AI Deals Still Being Made
Not all the news pointed to a retreat from AI. SK Hynix launched a US share sale to raise around $28 billion, drawing early interest from major investors.
Broadcom expanded its chip supply partnership with Apple through 2031, easing concerns that Apple would move more of that work in-house.
Wall Street rose overnight. The Dow gained 0.29%, the S&P 500 climbed 0.72%, and the Nasdaq added 1.12%, helped by hopes for a strong AI-driven earnings season.
Other Market Movers
LG Energy Solution dropped 6.4% after forecasting a 77% fall in operating profit due to weak electric vehicle demand.
Hanwha Ocean plunged 22.7% after Canada chose German submarines over South Korean ones.
Oil prices climbed after a tanker was struck near the Strait of Hormuz. US crude rose to $68.92 and Brent to $72.34.
Investors are also watching the release of Federal Reserve meeting minutes, the first under new Fed Chair Kevin Warsh.
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