Samsung and SK Hynix post record profits as AI concerns weigh on shares

Samsung and SK Hynix delivered record quarterly earnings, but the strong financial results failed to calm investor concerns over the long-term sustainability of the artificial intelligence investment boom. The two companies, which dominate the global memory chip market, reported historic profits while their shares declined amid fears that demand growth could eventually slow.

Samsung reported an operating profit of 89.5 trillion won for the second quarter, up 1,814% from a year earlier, on revenue of 171.5 trillion won. SK Hynix posted an operating profit of 60.5 trillion won, an increase of 557% year over year. Together, the two companies, which account for roughly 80% of global memory industry revenue, generated a combined operating profit of 150 trillion won, or about $104 billion, during a single quarter.

Although SK Hynix delivered one of the strongest performances in its history, its shares fell about 10% after earnings came in below analyst expectations of 64 trillion won. The decline extended a broader sell-off that began earlier in July despite continued strength in AI-driven memory demand.

Samsung and SK Hynix argued that customer commitments demonstrate a structural shift in the semiconductor industry rather than a temporary surge in spending. Samsung said several customers have signed firm supply agreements lasting up to five years with substantial advance payments. The company also confirmed long-term agreements with the world’s five largest data center customers. SK Hynix said it has secured contracts with around ten major customers.

Samsung expects memory shortages to continue until at least 2028, while SK Hynix believes supply constraints could persist beyond 2030. To meet expected demand, SK Hynix plans to invest at least 45 trillion won, or about $31 billion, in capital expenditures this year, representing a 50% increase from the previous year.

According to CNBC, Samsung believes each new generation of Nvidia graphics processors requires increasingly faster access to much larger volumes of data, reinforcing demand for advanced high-bandwidth memory products used in AI infrastructure.

Despite these forecasts, investors remain cautious. Samsung shares lost around 7% following preliminary earnings, while broader weakness spread across the semiconductor sector. Shares of AMD, Intel, and Micron also came under pressure as markets questioned whether the current AI investment cycle can avoid the overcapacity problems that have historically affected the memory industry.

Josh Gilbert, market analyst at eToro Asia-Pacific, said Samsung exceeded expectations but investor skepticism is likely to remain. He noted that markets are already looking beyond today’s shortages and questioning whether aggressive capacity expansion could eventually trigger another period of oversupply.

The debate now centers on whether long-term customer contracts and sustained AI demand can fundamentally change the industry’s traditional boom-and-bust cycle.