(July 7): Asian tech stocks slumped, as investors used Samsung Electronics Co’s results to lock in profits on a stellar year-to-date chip rally, rotating into unloved sectors less prone to earnings shocks.
Quarterly profit at the world’s largest memory chipmaker surged 19-fold on booming artificial intelligence (AI) demand, but was just 6% above analyst estimates. Its shares slid as much as 10% in Seoul, dragging down peers including South Korea’s SK Hynix Inc and Japan’s Kioxia Holdings Corp. An MSCI Inc gauge of Asian technology stocks dropped as much as 2.9% while financial and communications shares rose.
The moves provide further evidence that investors are becoming more sceptical on the AI boom after massive gains. Daily headlines on capacity additions, technology delays and rising debt levels that barely raised an eyebrow over the past few years are now seen as reasons to dump tech shares.
“The ‘sell the news’ dynamic was in play today — investors had extremely high expectations baked in,” said Tim Waterer, the chief market analyst of KCM Trade. “Even strong results aren’t enough to satisfy the market when valuations are stretched and rotation is well and truly underway.”
Memory and storage stocks that have been among the hottest trades this year are seeing the steepest retrenchment. Kioxia slid nearly 12% on Tuesday, trimming its gain for the year to just under 600%. South Korea’s Kospi fell more than 8% on the day, triggering a brief trading halt, but remains the world’s best-performing equity benchmark of 2026.
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The wobble in tech is giving underperforming defensive sectors a chance to shine. MSCI indices of Asian healthcare, finance and consumer stocks have climbed over the past two weeks while the tech hardware gauge is down more than 10%.
“Investors are hunting for cleaner valuations and less crowded positioning” in non-tech shares, said Hebe Chen, a senior market analyst at Vantage Global Prime. “But this is not the end of the semiconductor trade — if memory prices keep rising or the next chip earnings surprise lands strongly, money can rotate back into the leaders very quickly because the structural AI story is still very alive.”
While demand for memory has soared, the market is still waiting to see if the boom will be followed by the typical bust or if AI is creating a longer lasting “supercycle”.
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Samsung’s results “reinforce confidence in sustained AI-related demand, continued resilience in memory pricing and a constructive outlook for the industry over the medium to longer term”, said Albert Yong, a managing partner at hedge fund Petra Capital Management. That said, “investors might have already priced in solid results and are increasingly focused on the longer-term trajectory of the memory cycle”.
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