AI Chip Selloff Spreads Across Global Markets

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:23)
This is Bloomberg Tech. Coming up, Samsung's quarterly profit surges on memory demand, but not enough for investors after a 150% rally this year. Plus, Amazon is back in the bond market, looking to raise at least $25 billion to fund spending on AI infrastructure. And SpaceX joins the NASDAQ 100 index as the sell-side coverage of Elon Musk's company is go for launch. This is what markets look like right now. It is a story about semiconductors, and it is pretty ugly out there. It all relates to Samsung's quarterly earnings, which were a stellar set of numbers. So this is not about what's happening with the fundamentals. And fundamentally, nothing in the memory chip market has changed. Samsung told us, supply is still tight. DRAM and NAND pricing is going up, and in terms of line of sight, for when that supply dynamic changes, there isn't much visibility beyond the other side of 2027 Overnight, this is what Samsung did. We've become very accustomed, particularly in the Korean market, to swings, both to the upside and the downside. So the Samsung drop of 9%, that looks dramatic. It was the biggest drop on Samsung since June 23rd. What happened? Let's get to Bloomberg's executive editor, Peter Elstrum. Okay, revenue more than doubled.
Profit even better relative to the prior quarter. Let's start with the numbers.

**Peter Elstrom** (1:49)
Yeah, Ed, it's amazing how much time we are now spending talking about Korean chipmakers, especially these memory chipmakers, because they are such a key part of the market right now, and they're such a key part of the technology industry. So for Samsung, Samsung is unusual. They report their earnings in two slices. This is the preliminary numbers. We only get two numbers. We get revenue and we get operating profit. As you mentioned, revenue more than doubled. Operating profit was up 19-fold from a year ago. It's a pretty incredible number. They made about $58 billion.
It could be one of the most profitable companies. It will be one of the most profitable companies in the world for this quarter. They could contest to perhaps be the most profitable company out there. They're making a lot of money, but as you say, it wasn't enough for investors. Even though it beat the analyst estimates by about 6%, they were still expecting a little bit more. Maybe they wanted some more guidance going into the future here. But it is a signal that expectations are very high for AI right now. Samsung is playing a key role in this, as is SK Hynek. So we're going to get more of these numbers, a lot of volatility here.

**Ed Ludlow** (2:52)
Peter, this is a stock that prior to the numbers hitting was up 150% year to date.
Zoom out, what has the story for Samsung and SK been in career trading this year? And what has been the attitude of markets towards the memory names?

**Peter Elstrom** (3:10)
Yeah, you're making a very good point. Both Samsung and SK Hynek have been on a rocket ride this year. Samsung up 150%, SK Hynek up more than that. A lot of this has to do with bullishness on the market. A lot of it has to do with the rising profits. But you also have these leveraged ETFs that people are trading where they're trying to get 2X or 3X exposure to these companies. It's adding to that volatility at that point. So you have a lot of people who truly believe in the AI trade. They truly believe this is going to be a seismic buildup that will be very, very important. But you got a lot of traders bouncing the stocks around a lot. As you mentioned, there's just a lot of volatility here. And what we're seeing now is a lot of the volatility in South Korea is now spilling into other markets. We're seeing it week after week.

**Ed Ludlow** (3:55)
Bloomberg's Peter Elstrom, who leads our coverage of Asia's technology. Thank you very much. Let's keep the conversation going. Focus on AI spending. While Samsung's results highlight the strength of demand for memory chips, Bloomberg Intelligence says the next leg of the investment cycle may be driven by governments as much as the big tech spenders. Kunjan Tabani writes that South Korea's massive AI investment plan reinforces the case for sovereign AI with roughly 880 billion in planned spending on memory fabs and data centers, helping extend the semiconductor capex cycle beyond the hyperscalers. Joining us now is Kunjan Tabani, Bloomberg Intelligence Senior Semiconductor Analyst. I was so interested in this Bloomberg Intelligence thesis because the same thing happened first with GPUs. Now you're taking it to the memory market.