Following a dramatic two-day selloff exceeding 30%, shares of the leading South Korean memory chip makers staged a notable rebound in the next session in Seoul. Samsung Electronics rose 21% and SK Hynix rallied 25% in Friday trading, recovering part of the earlier collapse that occurred even as both companies posted record earnings.
The apparent contradiction is stark: both firms saw steep near-term declines on the heels of earnings that, on the face of it, were exceptional by most operating metrics. The market move left them materially below their 52-week peaks despite the intraday recovery — Samsung remains about 33% under its 52-week high and SK Hynix roughly 45% below theirs — which means the longer-term drawdown is still in place despite Friday’s strong bounce.
Reported results and market reaction
Samsung’s stated Q2 2026 results were strikingly strong: revenue of ₩171.5 trillion, up 130% year-over-year, and an operating profit of ₩89.5 trillion, representing a 1,814% increase compared with the year-ago period. The operating margin reached 52.2%, and memory sales alone expanded 471% year-over-year. SK Hynix also logged record quarterly operating profit, a sixfold year-over-year increase. Nonetheless, the two stocks initially slid roughly 30% over two days amid investor concerns.
Drivers supporting the bullish outlook
- Samsung has a $200 billion partnership with Broadcom that extends through 2030, covering HBM, advanced packaging, and sub-2nm logic, creating a multi-year revenue anchor.
- Nvidia and SK Group announced an AI infrastructure initiative exceeding $500 billion, with SK Hynix designated as Nvidia’s long-term supplier for HBM4 memory.
- Citi reiterated Buy ratings on both companies and highlighted a shift in inventory supply-demand ratios from 70% to 50%, signaling scarcity rather than oversupply in the market.
- Samsung guided that HBM4 sales should triple in Q3 2026 and projected supply constraints to remain in place through 2028, implying a multi-year runway for memory pricing strength.
Concerns that drove the selloff
Despite the strong reported numbers, several near-term and structural concerns prompted the heavy selling that created the buying opportunity:
- Reports of delayed shipments for advanced products could limit near-term DRAM pricing power, undermining immediate revenue realization.
- SK Hynix does not have a disclosed capital return framework, a notable omission for a company producing record cash, which raises governance questions for investors focused on returns.
- Any moderation in AI infrastructure spending by hyperscalers would sharply weaken the central demand assumption that underpins much of the bull case for both companies.
- Competition from CXMT - China’s largest DRAM maker - adds a geopolitical dimension to pricing dynamics; CXMT is targeting an $8.6 billion IPO, reported revenue growth of 719% year-over-year, and it already holds 7.7% of the global market, introducing an additional uncertainty to long-term pricing.
Performance snapshot
| Metric | Samsung | SK Hynix |
|---|---|---|
| Today’s Move | +21% | +25% |
| 1-Month Return | -25% | -37.5% |
| YTD Return | +108% | +154% |
| Off 52W High | ~33% | ~45% |
These intraday gains indicate buyers are already stepping in to close the late selloff, but chasing a 20%+ intraday move is materially different from initiating positions during the prior decline. The risk-reward calculus shifts depending on entry price and one’s tolerance for continued volatility.
A contrast in company profiles
Samsung presents a more diversified model, with exposure across memory, foundry services, and device businesses, and the Broadcom alliance provides visible long-term contractual demand. SK Hynix is a purer play on AI memory demand - a profile that tends to amplify returns on the upside but also magnify downside in the event of execution or demand interruptions. The larger drawdown and the more pronounced rebound for SK Hynix reflect that higher beta characteristic.
Bottom line
The underlying businesses reported exceptional results and appear to be positioned to benefit from AI-driven demand for memory. But the market evidence that prompted the earlier sharp selloff is centered on a narrow set of execution and demand risks. For investors, the central question is not the quality of the companies per se, but whether AI capital expenditure from hyperscalers will sustain the pace that underpins current valuations. That single variable largely determines whether the bullish forecasts materialize.
Note: This article summarizes reported results and market reactions and does not provide investment advice.