"Is This the Peak?" Shares Plunge Amid Fears... 'Grim Reaper of Semiconductors' Morgan Warns of Memory Correction

World’s Top Operating Profit, Yet Samsung Electronics Shares Plunge
Morgan Stanley: "Memory Sector May Have Peaked"

On the 7th, Samsung Electronics achieved its highest-ever performance for the second quarter. According to Samsung Electronics' preliminary results for the second quarter of this year, the company's total revenue was 171 trillion won, and operating profit was 89.4 trillion won. These figures represent increases of 129.31% and 1810.26%, respectively, compared to the same period last year. The photo shows Samsung Electronics Seocho Building in Seocho-dong, Seocho-gu, Seoul. 2026.07.07 Photo by Dongju Yoon

Despite announcing world-leading second-quarter results, Samsung Electronics' stock price is plummeting. Analysts attribute the sharp sell-off to concerns over the slowing growth rate of memory semiconductor prices and worries that the company has reached its earnings peak, prompting large-scale profit-taking.

As of 1:39 p.m. on July 7, Samsung Electronics was trading at 288,000 won, down 9.43% from the previous trading day. After hitting an all-time intraday high of 380,000 won in mid-June, the stock has plunged about 24% over the past two weeks. With the stock price of Samsung Electronics, the market bellwether, tumbling, the KOSPI index also fell by more than 8%, triggering a circuit breaker.

That morning, Samsung Electronics announced it had recorded 89 trillion won in operating profit. This is the highest quarterly result in its history and surpasses any other company worldwide. Previously, the global record for highest quarterly operating profit was held by Nvidia in the first quarter of this fiscal year (February to April), with 53.5 billion dollars (about 81.9 trillion won). If this trend continues, market forecasts suggest Samsung Electronics could achieve the world's highest full-year operating profit this year.

While earnings have reached record highs, the stock's sharp decline is interpreted as the result of growing concerns in the market about a semiconductor "peak-out," or slowdown after a peak. In a recent report, global investment bank Morgan Stanley analyzed that the upward momentum for memory semiconductor stocks is weakening.

On July 6 (local time), Morgan Stanley stated in a report, "The slowing growth rate of DRAM prices, stabilization of inventory improvement, and the peak in the magnitude of earnings-per-share (EPS) upward revisions all suggest that memory semiconductor stocks may undergo a correction." However, the firm maintained a positive long-term outlook and projected that next year's profits would increase by 35–40% compared to this year. Morgan Stanley identified the most crucial point to watch going forward as whether hyperscalers will continue to maintain their AI-related capital expenditure (CAPEX) guidance.

Morgan Stanley had previously triggered steep declines in the share prices of Samsung Electronics and SK hynix by releasing its "Winter is coming" report on the memory semiconductor market in 2024, earning the nickname "the grim reaper of memory semiconductors." Back in August 2021, it had also called for a semiconductor peak, prompting corrections in memory chip stocks.

However, a positive outlook for semiconductors still prevails among domestic securities firms. Most analysts believe that the current decline is a temporary phenomenon due to profit-taking, and that fundamentals remain strong. Sunwoo Kim, an analyst at Meritz Securities, stated, "Samsung Electronics' second-quarter results far exceeded market expectations," and added, "Because of spatial constraints, the current cycle is such that memory supply will remain far short of meeting demand growth at least until the fourth quarter of next year." Kim emphasized, "It is a time when investors should base their decisions on where we are in the memory cycle, rather than being driven by fears stemming from vague expectations."

Hyungkeun Ryu, an analyst at Daishin Securities, commented, "The average selling price (ASP) for high bandwidth memory (HBM) next year is projected to rise by 91% compared to the previous year. This will help narrow the profitability gap based on Samsung Electronics' absolute competitive advantage," adding, "If the company resumes share buybacks for employee incentive compensation, this will provide greater support for the stock price's downside resilience."

This content was produced with the assistance of AI translation services.