Samsung’s AI profits soar, but market value drops

The unprecedented demand for AI servers, accelerators, and high-performance computing systems has created intense competition for memory chips, which are essential for training and running large AI models. As the world’s largest memory chipmaker by sales, Samsung has been among the biggest beneficiaries of the trend.

However, the market’s reaction suggests investors are looking beyond the current boom. Despite the blockbuster earnings, Samsung’s shares fell sharply, wiping more than US$80 billion from the company’s market capitalisation. Investors appear increasingly concerned that the pace of AI infrastructure spending may not be sustainable over the long term.

Over the past two years, technology companies have committed hundreds of billions of dollars to building AI data centres and computing infrastructure. While those investments have fuelled record demand for semiconductors, some investors are now questioning whether spending will eventually moderate as companies evaluate the returns on those massive capital expenditures.

The concern is not that AI demand will disappear, but rather that growth could slow from today’s extraordinary levels. Even a modest pullback in infrastructure spending could affect memory pricing, particularly after the steep gains seen this year.

For now, memory makers continue to enjoy strong pricing power, but investors are increasingly focused on what happens when the industry’s biggest customers begin shifting from building AI infrastructure to monetising it.

Source: Reuters