- Samsung’s handset business suffers its first quarter in the red despite revenues rising 130%.
- Says the current supply crunch is not a temporary spike but a structural condition that could persist well beyond 2026.
Samsung Electronics reported a more than 250-fold surge in semiconductor profit for the second quarter of 2026, driven by insatiable demand for AI memory chips — yet investors responded by wiping over $80 billion off the company’s market value, underscoring a widening gulf between current performance and the market’s anxiety about what comes next.
The world’s largest memory chipmaker posted an operating profit of 89.5 trillion won ($61.98 billion) for the April-to-June period, in line with its preliminary estimate of 89.4 trillion won and up dramatically from 4.68 trillion won a year earlier.
Revenue rose 130 per cent to 171.5 trillion won. The semiconductor division alone generated 89.2 trillion won in operating profit — a figure that eclipses what most global technology companies earn across their entire operations.
The numbers are extraordinary by any measure. Samsung’s quarterly profit now surpasses that of Nvidia, long considered the primary beneficiary of the AI boom, marking a decisive shift in where the financial rewards of the AI buildout are accruing. Memory, not just compute, has become the bottleneck — and the prize.
Falling share prices
The disconnect between Samsung’s earnings and its stock performance is the story beneath the story. Analysts attributed the decline to expectations that had run so far ahead of even these historic numbers that they left no room for surprise. The market had effectively already priced the record in, transforming what might otherwise be a celebration into a trigger for profit-taking.
Deeper worries are also at play. Investor concerns have coalesced around two questions: whether the torrent of AI infrastructure spending can be sustained, and whether competition from Chinese memory makers will eventually erode the pricing power that Samsung and SK Hynix currently enjoy.
These are not theoretical risks. Samsung’s own guidance acknowledged “partial demand moderation in mobile and PCs,” even as it projected continued strength in server markets.
The mobile division’s results sharpen the tension. Surging chip prices — a boon for the semiconductor unit — have become a margin-crushing headwind for Samsung’s handset business, which reported a 700 billion won loss, its first quarter in the red.
The company that dominates global memory is, in effect, cannibalising its own downstream operations, a dynamic that exposes how the AI boom distributes its benefits unevenly across a vertically integrated giant.
Samsung’s big bet
Samsung’s outlook is unambiguous. “In H2 2026, the Memory Business expects robust demand centered on servers stemming from continued AI infrastructure capex and broader adoption of agentic AI,” the company said. “This is projected to keep the market undersupplied, despite partial demand moderation in mobile and PCs.”
The reference to “agentic AI” is telling. Samsung is signaling that the next phase of AI deployment — autonomous agents performing complex, multi-step tasks — will require an entirely new tier of memory capacity and performance, extending the cycle beyond what data center buildout alone might justify.
If that thesis holds, the current supply crunch is not a temporary spike but a structural condition that could persist well beyond 2026.
SK Hynix’s announcement a day earlier reinforced the industry’s conviction. The company reported bumper quarterly results and flagged plans to raise capital spending by roughly 50 per cent this year, betting that demand will continue to outstrip even aggressive capacity expansion. Both memory giants are effectively making the same wager: that the AI infrastructure story has years, not quarters, left to run.
What the market is really asking
Behind the stock moves lies a more fundamental question that Samsung’s earnings cannot answer on their own. The AI infrastructure boom has been fueled by hyperscaler capex commitments running into the hundreds of billions of dollars.
If those commitments waver — either because the economic returns on AI investment prove slower to materialize than the spending itself, or because a macroeconomic shock forces reassessment — the memory market’s supply-demand equation flips quickly.
Samsung’s record quarter, in this light, is both a validation of the AI thesis and a high-water mark that invites scrutiny about whether it can be sustained. The company has delivered the numbers. Whether the market believes they are repeatable is a different question entirely — and for now, the answer appears to be no.
For Samsung, the task ahead is not just to keep producing chips at the leading edge, but to convince investors that the demand for those chips rests on foundations solid enough to survive the inevitable moment when the AI capex cycle turns from expansion to digestion.
The company’s bet on agentic AI as the next driver suggests it is already building that case. But in a market that has learned to price in the future faster than companies can report the present, record profits may no longer be enough.