Record Samsung earnings, weaker stocks: Why Asia’s AI rally is losing steam.
Asian stocks fell on Tuesday as investors took profits following this year’s AI-driven rally, with a blockbuster earnings outlook from Samsung Electronics failing to stem a broader sell-off in technology shares. A weak Japanese yen and lingering geopolitical tensions also kept market sentiment cautious.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell about 0.7%, while Japan’s Nikkei dropped more than 1%. South Korea’s Kospi led regional declines as heavyweight chipmakers came under pressure.
Samsung forecasts 19-fold jump in Q2 profit
The market retreat came despite Samsung Electronics forecasting a 19-fold increase in second-quarter operating profit to a record high, highlighting continued strong demand for high-bandwidth memory (HBM) chips used in artificial intelligence servers.
Samsung’s upbeat earnings outlook helped ease concerns that had weighed on the technology sector in recent weeks, as investors questioned whether the massive investments flowing into artificial intelligence would generate sufficient returns.
The South Korean technology giant said it expects second-quarter operating profit to surge by more than 1,800% year-on-year, driven by sustained AI-led demand for memory chips.
Kospi slides as investors take profits
Despite Samsung’s upbeat earnings forecast, its shares fell about 7% in early trading, dragging South Korea’s Kospi lower and extending a sell-off that has gripped the market over the past two weeks.
The Kospi, which had more than doubled this year to reach a record high in June, has since retreated by around 20%.
Rather than focusing on Samsung’s strong earnings outlook, investors opted to lock in gains after a powerful rally in semiconductor stocks, citing stretched valuations and pulling both Samsung shares and the broader market lower.
Analysts said the market is taking a breather after an exceptional first half of the year, with investors increasingly questioning how much further AI-related stocks can rally following months of outsized gains.
Nikkei under pressure
Japan’s Nikkei also came under pressure as technology stocks declined, while the yen hovered near multi-decade lows against the US dollar, keeping traders on alert for any signs of intervention by Japanese authorities.
Although the weaker yen continues to benefit exporters, it has also intensified concerns about imported inflation.
Elsewhere, markets in China and Hong Kong proved relatively resilient, though investors remained cautious ahead of key economic data releases and fresh policy signals from Beijing aimed at supporting growth.
The regional pullback followed overnight gains on Wall Street, where US equities advanced on optimism over corporate earnings and expectations that softer economic data could ease pressure for tighter monetary policy.
Investors are now awaiting the minutes of the US Federal Reserve’s latest policy meeting for fresh clues on the outlook for interest rates.
Oil edges higher
Oil prices edged up as traders continued to monitor tensions involving Iran and shipping through the Strait of Hormuz. However, prices remained well below the highs reached during this year’s Middle East conflict.
Gold slipped slightly, while the US dollar strengthened against a basket of major currencies.
The latest market decline reflects a more cautious mood across Asia after foreign investors sold regional equities at a record pace during the first half of 2026, raising questions about whether the AI-driven rally can be sustained through the rest of the year.
