Samsung’s Record Profit Meets Its Lowest P/ E in 25 Years — A Valuation Paradox in Seoul

Samsung's Q2 operating profit hit a record $58.4B, exceeding Nvidia and Apple, yet shares fell 6.92% amid 'sell the news' and KOSPI rout, exposing deep valuation concerns.

Samsung Electronics delivered a second-quarter operating profit that shattered records set by Nvidia and Apple, yet the stock suffered its sharpest one-day drop in months. The disconnect is not just about profit taking — it has exposed a deep valuation anomaly that has sent the chipmaker’s price-to-earnings ratio to levels not seen since the turn of the millennium.

The company reported an operating profit of 89.4 trillion won ($58.4 billion) for the quarter ended June 2026, on revenue of 171 trillion won. That topped Nvidia’s previous peak of $53.5 billion and Apple’s best of $50.9 billion. Excluding roughly 20 trillion won in special bonuses, the underlying profit would have surpassed 100 trillion won. Yet on the day after the guidance was released, the stock slid as much as 10.1% intraday before closing down 6.92% at 278,000 won. By Friday it had recovered 2.52% to 285,000 won, but the weekly loss still stood at 7.92%.

The violent reaction underscores how nervous investors have become in the current semiconductor cycle. A good chunk of the good news had already been priced in following a 122.25% year-to-date rally, making the earnings release a classic “sell the news” event. But the sell-off was amplified by a broader rout in Seoul’s tech-heavy KOSPI index, which lost 23% from its June 19 peak in just a few weeks. On two consecutive days, sidecar circuit breakers were triggered, and the exchange recorded ten such interruptions in June alone. Regulators are now investigating the role of leveraged single-stock ETFs, which at times accounted for more than half of all trading volume on the main and junior boards.

Analysts are deeply split on where Samsung goes from here. Kiwoom Securities cut its target from 430,000 won to 390,000 won, while other houses maintain objectives as high as 600,000 won. Morgan Stanley warns of an approaching peak in the memory cycle, but KB Securities and J.P. Morgan call the pullback a buying opportunity, citing expectations that AI-related capital spending will reach $1.1 trillion by 2027 and that meaningful supply expansion is unlikely before 2028. Goldman Sachs projects combined operating profit for Samsung and SK Hynix will climb from 645 trillion won this year to 1,064 trillion won by 2028. Meanwhile, Counterpoint Research flags a possible supply glut from the second half of 2027 that could pressure prices. Jung Dawoon of LS Securities argues the current concerns are more about margin debate than a genuine cycle peak, making the beaten-down shares attractive.

On the business front, two separate pricing moves are circulating. Samsung Foundry is reportedly planning to raise prices for 4- and 5-nanometer processes by around 15% for new customers, with selected 8-nanometer automotive orders also affected — a move that follows similar increases by TSMC. Separately, reports indicate Samsung is considering a 20% hike in average DRAM prices, citing ongoing supply tightness. Neither measure has been officially confirmed. The foundry push comes as Samsung’s market share languishes at 6.5% versus TSMC’s 72.3%, but Yuanta Securities notes that Chairman Lee Jae-yong’s recent attendance at the Sun Valley conference signals potential new foundry orders, possibly including a Tesla chip contract or diversification by Google and Meta. The company’s Texas plant in Taylor is on track to begin operations next year.

A potential US listing for Samsung has also resurfaced as a topic of speculation, which would mirror rival SK Hynix’s Nasdaq presence and provide a broader investor base.

The stock now trades well below its 50-day moving average of 303,340 won but far above the 200-day average of 181,142.50 won. The relative strength index of 43.9 indicates neither overbought nor oversold conditions, while annualized 30-day volatility remains elevated at 98.58%. Market capitalization stands at around 1,084 billion euros. Most strikingly, Samsung’s trailing 12-month price-to-earnings ratio has fallen to 4.81 — the lowest since the year 2000. That level suggests the market is pricing in virtually no earnings growth despite record profits, a paradox that will be tested when Samsung releases full segment-level results on July 30. For now, the average of 36 analyst targets points to 487,815 won over the next 12 months, implying upside of 71% from current levels — a gap that reflects just how wide the debate has become.