Samsung Electronics delivered one of the strongest quarters in its history, posting a more than 1,800% year-over-year jump in operating profit. Still, the blockbuster earnings failed to impress investors as concerns about artificial intelligence spending sent the company's stock sharply lower.
Shares of the South Korean technology giant closed nearly 7% lower on Tuesday after it released preliminary results for the second quarter. Samsung estimated operating profit of 89.4 trillion won, or about $58.4 billion, for the April through June quarter, up from 4.7 trillion won during the same period a year ago.
Revenue reached 171 trillion won, compared with 133.9 trillion won in the previous quarter, while sales more than doubled from a year earlier, reflecting booming demand for advanced memory chips used in AI data centers and high-performance computing.
Despite those headline figures, analysts said investors had already anticipated an exceptional quarter. "The stock had priced in a historic quarter for months, and once the numbers confirmed it was significant but not far beyond what the market had already expected, there wasn't much to reward anyone stepping in," Zavier Wong, market analyst at eToro, told CNBC.
"It acts more like confirmation, and confirmation is what people sell into." Instead of celebrating Samsung's record earnings, investors focused on whether the AI-driven boom that has propelled semiconductor companies over the past two years can continue.
Wong said Samsung shares were "dragged down by concerns that AI infrastructure spending can't keep growing at the pace that has been driving memory prices."
The semiconductor industry has enjoyed soaring demand as technology companies race to build AI infrastructure, fueling higher prices for advanced memory products such as high-bandwidth memory chips.
However, investors increasingly worry that spending by hyperscale cloud providers and other AI developers could eventually moderate, reducing pricing power for memory manufacturers.
Samsung also faces rising operating expenses at home. The company's second-quarter results include one-time expenses tied to employee bonuses. Earlier this year, Samsung reached an agreement with labor unions to remove its long-standing cap that limited bonuses to 1,000% of base salary.
Under the new arrangement, the company will allocate 10.5% of operating profit toward employee bonuses after weeks of labor protests demanding workers receive a larger share of Samsung's record earnings.
Those additional costs have become another source of concern for investors. "A lot of negative news has been building up, so it looks like everyone wants a piece of that profit. The labor union wants it, and the Korean government wants it," Tom Kang, research director at Counterpoint Technology Market Research, told CNBC.
Beyond short-term earnings, Samsung's aggressive investment strategy is creating additional uncertainty. The company recently pledged to build massive new semiconductor fabrication facilities in southern South Korea, a move that analysts say could require significant infrastructure investment because the region lacks the established semiconductor ecosystem surrounding Samsung's traditional manufacturing hubs.
Kang noted that the new location represents "new ground," meaning Samsung must build much of the supporting infrastructure from scratch. Investors had expected the company to continue expanding closer to its existing fabrication network, making the announcement an unexpected development that may weigh on profitability in the coming years.
Samsung also faces increasing competition for investor attention. This week, domestic rival SK Hynix is preparing for its American depositary receipt listing in the United States, an event analysts say could temporarily shift capital toward Samsung's biggest competitor.
"It doesn't help that SK Hynix's ADR listing lands the same week, pulling some of that rotation appetite elsewhere," Wong told CNBC.
