07.07.2026 - One Corporate News sends Markets South
This morning, South Korean technology giant Samsung Electronics reported preliminary second-quarter results that exceeded expectations, delivering another record quarter driven by the ongoing artificial intelligence investment boom.
The world's largest memory chip manufacturer expects operating profit of KRW 89.3 trillion (approximately USD 58.4 billion) for the second quarter of 2026, significantly above the previous record of KRW 57.2 trillion achieved in the first quarter. The strong performance was primarily fueled by exceptional demand for AI memory chips.
Despite the record earnings outlook, Samsung shares plunged 8.5%.
At the same time, SK Hynix, the world's second-largest memory chip producer, lowered the fundraising target for this week’s planned Nasdaq ADR listing following the recent decline in its share price. The company now aims to raise approximately KRW 43.1 trillion (around USD 28 billion) through the offering.
Markets:
Equities: South Korea's Index KOSPI plunged more than 8% intraday before recovering to close almost 5% lower; US Nasdaq Futures are down around 1%, led by broad weakness across semiconductor and AI-related stocks.
My View: The market reaction highlights just how elevated expectations have become and how extreme investors are positioned.
Samsung delivered record profits, yet investors focused on revenue growth that failed to satisfy increasingly unrealistic expectations. Any sign that the extraordinary pace of AI spending could moderate is now enough to trigger heavy selling across the entire semiconductor sector.
This is another reminder of how crowded positioning has become. A single corporate announcement erased hundreds of billions of dollars in market value across the industry and pushed the KOSPI down more than 8% intraday. This is a clear sign that investor nervousness is rising rapidly.
Already for some weeks, I have argued that the AI investment cycle is showing characteristics of a classic bubble. The assumption that growth can continue indefinitely at the current pace, most of it debt financed, is becoming increasingly difficult to justify.
We are seeing more warning signs. Free cash flow at many hyperscalers is deteriorating as capital expenditures continue to explode. At some point, these investments will need to generate adequate returns. If they do not, write-downs and a reassessment of investment plans could follow much sooner than many investors currently expect.
At current stage, the market has become a battleground between bulls and bears, explaining the violent swings we have witnessed over recent weeks. Optimism within the bulls remains extremely high, ignoring that cracks are beginning to appear beneath the surface.
Most bullish investors continue to ignore these warning signals, until it is too late.
Below the surface, many risks are already quietly building. As always, I invest my own money alongside my views, and my conclusion remains unchanged: better be safe than sorry.
Become a member to access more valuable market updates like this
