Samsung Electronics takes a big dive! Korean stocks plunged. What happened?

Samsung Electronics takes a big dive! Korean stocks plunged. What happened?

Samsung Electronics suddenly took a big dive. On the morning of July 7, the share price of South Korean chip giant Samsung Electronics plunged sharply, plunging more than 6% at one time, dragging South Korea's KOSPI index down more than 4% at one time.

On the news, Samsung Electronics' preliminary performance report shows that revenue in the second quarter of 2026 is expected to be 171 trillion won, slightly exceeding market expectations; operating profit is expected to be 89.4 trillion won, a significant increase of 1810% year-on-year, higher than market expectations.

Michael Wilson, chief equity strategist at Morgan Stanley, pointed out in the latest report that the momentum of the semiconductor sector has been exhausted recently, and the Philadelphia Semiconductor Index has fallen by nearly 12% from its high point.

Funds are turning to AI supercomputing giants such as Microsoft, Amazon, and Meta, as well as consumer, biotechnology and other sectors. On the morning of July 7, Beijing time, after the South Korean stock market opened, the share price of chip giant Samsung Electronics plunged sharply, once falling by more than 6%.

As of 08:30, the drop reached 5.27%; SK Hynix's share price also fell by 1.45%. Affected by this, South Korea's KOSPI index fell 2.89%.

On the news, before the opening of the Korean stock market, Samsung Electronics disclosed in its preliminary performance report that from April to June this year, the company's operating profit is expected to reach 89.4 trillion won (approximately RMB 396.9 billion), setting a new quarterly historical record, a significant increase of 1810% year-on-year and a month-on-month increase of 56%, higher than the 84.2 trillion won previously predicted by analysts.

Revenue is expected to reach 171 trillion won, exceeding market estimates of 169.2 trillion won, a year-on-year increase of approximately 129%. The company plans to release a complete financial report on July 30, when it will disclose net profit and classified data of each business unit.

Samsung Electronics’ quarterly operating profit has exceeded Nvidia’s operating profit of US$53.536 billion (approximately 82 trillion won) in the previous quarter, making it the company with the highest quarterly operating profit in the world.

Despite the impressive performance of its storage business, Samsung's overall performance still faces internal structural pressures. Analysts expect losses from the company's foundry and logic chip (LSI) businesses may widen in the current quarter, in part because bonus expenses are included proportionally in the semiconductor unit's overall costs.

In May this year, Samsung reached a salary agreement with its chip department employees, linking performance bonuses to operating profits, and stipulating that 10.5% of the semiconductor department's annual operating profits be allocated for special bonuses on the premise of meeting specific profitability indicators.

Some analysts said that without this provision, Samsung's operating profit would further exceed market expectations. Goldman Sachs said in its latest report that the recent turmoil in the Korean stock market has not changed its bullish expectations.

They expect Korean stocks to continue to rise in the second half of this year and the gains will spread to a wider area.

Goldman Sachs predicts that the Korean stock benchmark KOSPI index will reach 12,000 points in the next 12 months, which means an increase of more than 20% from current levels, but Goldman Sachs also warned that the road to this rise may be "twisting." Goldman Sachs expects the unusually strong earnings growth of South Korean listed companies to continue, predicting profits will grow 320% this year and another 35% in 2027.

Goldman Sachs said that in the Korean stock market, with the exception of Samsung Electronics and SK Hynix, the valuations of other companies remain reasonable relative to regional peers, which has provided impetus for further gains in Korean stocks.

Michael Wilson, chief equity strategist at Morgan Stanley, pointed out in the latest report that the momentum of the semiconductor sector is fading, and investors are beginning to turn to AI supercomputing giants that have lagged behind this year, including Microsoft, Amazon and Meta.

He believes that this round of rotation occurs against the background of weak overall stock market shocks, and the market index will continue to be under pressure. Wilson also maintained the S&P 500's year-end target price at 8,000 points, which still has room for about 6% upside from current levels.

Wilson said he is more inclined to supercomputing giants than semiconductor-related stocks in the near future. He believes that companies such as Microsoft, Amazon, and Meta are attractive in the AI ecosystem, and the core lies in the solid support provided by their strong basic businesses.

In contrast, according to Bloomberg data, a basket of stocks of supercomputing giants compiled by UBS has fallen by 2% since September last year, which is in sharp contrast to the gains in the semiconductor sector, which also means that this group has room to make up for its gains.

Wilson said the outlook for capital expenditures will become a core issue for investors in the next phase. JPMorgan Chase strategist Mislav Matejka agrees with Wilson that the market rally will extend beyond the technology sector in the second half of the year. "AI is unlikely to be the only story in the market," Matejka wrote in a research note.

Hideyuki Ishiguro, chief strategist at Nomura Asset Management, said in a report that chip-related stocks are under pressure due to concerns about supply and demand conditions in the storage market and profit-taking in leveraged ETFs. In the short term, stock prices are driven by supply and demand and investor sentiment.

But he added that chipmaking companies still have upside momentum from AI-related earnings growth and expanding free cash flow. Dongcai Illustration·Add some useful information (

#Stocks #Nvidia #Microsoft #Meta #Amazon