Samsung earnings beat not enough as AI bar rises, chips sell off

Samsung Electronics posted quarterly profit that topped Nvidia and Apple. Its shares fell 8% on Tuesday. Traders said the results faced a higher bar: investors wanted even stronger AI demand signals.

The selloff spread across the semiconductor sector. The iShares Semiconductor ETF slid 5%. Memory chip makers reliant on AI-driven demand have seen huge gains this year. Micron and Sandisk are up more than 220% and 570% respectively. Tuesday's drop reflected a growing worry that pricing power may be peaking, traders said. The concern: AI spending cannot keep up with rising memory costs. Apple and Microsoft have already raised product prices to offset higher component bills.

SK Hynix, set to list on Nasdaq this week, fell 7% in Korea. The company plans to raise $28 billion in what would be the second-largest listing after SpaceX. The selloff came ahead of that deal as investors recalibrated expectations after memory's historic run.

U.S. chip makers fell in sympathy. Sandisk and Micron dropped about 8% and 5%. Intel and Applied Materials each lost 8%. Lam Research and AMD fell 7% and 5%.

Amplifying the move, news emerged that Chinese AI startup DeepSeek is developing its own chip to bypass U.S. export restrictions and reduce reliance on Nvidia.

Memory stocks have been on a tear as AI demand fuels a supply crunch, giving suppliers pricing power. The sustainability of that pricing is now in question. Investors are watching for signs of demand softening, traders said. Microsoft, which has an Alpha Score of 55/100, is among the companies that have raised product prices to offset higher memory costs.

The SK Hynix listing begins trading Friday. Samsung shares fell another 2% in after-hours trading.