European semiconductor stocks moved lower on Tuesday after Samsung Electronics (USOTC:SSNHZ) shares fell sharply despite the company delivering record preliminary earnings, prompting investors to reassess expectations for the artificial intelligence-driven rally in chipmakers.
ASML (EU:ASML) declined 4.2% in Amsterdam by 07:42 GMT, while STMicroelectronics (BIT:STMMI) and Infineon (TG:IFX) each lost more than 4%. ASM International (EU:ASM) and BE Semiconductor (EU:BESI) dropped over 3%, and Soitec recorded losses of as much as 10.4%, mirroring the weakness seen in Asian markets.
Samsung results fail to satisfy investors
Samsung shares fell around 7% after the company released its preliminary second-quarter figures, while rival SK Hynix lost 6%, contributing to an almost 5% decline in South Korea’s KOSPI index.
The technology group forecast second-quarter operating profit of 89.4 trillion won (US$58.44 billion), representing an almost 19-fold increase from a year earlier and exceeding the combined profit generated over the previous three years. The result also surpassed the LSEG SmartEstimate of 87.3 trillion won. Revenue is expected to increase by 129% to 171 trillion won.
AI growth concerns remain in focus
Despite the record figures, analysts suggested the market reaction reflected expectations that had already been incorporated into share prices, alongside concerns about how long exceptionally strong AI-related demand can continue.
“Samsung’s strong earnings were widely expected and had largely been priced in after its shares rallied ahead of the results,” Albert Yong, managing partner at Petra Capital Management, said in comments reported by Reuters.
He added that investors remain focused on “the sustainability of the AI boom and the risk of slower AI infrastructure spending by major U.S. technology firms.”
Samsung’s preliminary results include one-off costs related to employee bonus provisions. Earlier this year, the company agreed to remove its cap limiting bonuses to 1,000% of base salary and earmarked 10.5% of operating profit for employee bonuses following several weeks of union-led protests seeking a larger share of company profits.
Another factor weighing on sentiment has been the sharp rise in memory chip prices over the past year, raising questions about the durability of demand across the semiconductor industry.
Samsung is expected to publish its full second-quarter results, including divisional performance, on 30 July.
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