“Sell the News” or Cycle Top? The Real Logic Behind the Plummeting Stock Prices of Samsung and SK Hynix

Compiled & Translated by: Deep Tide TechFlow

Guest: EJ, Co-host of Limitless Podcast

Host: Josh, Limitless Podcast

Podcast Source: Limitless Podcast (formerly Bankless channel)

Original Title: The AI Trade Everyone's Getting Wrong

Release Date: July 9, 2026

Key Takeaways

Samsung's latest quarterly profit hit $58.5 billion, surpassing NVIDIA's $53 billion for the same period. Over 94% of that profit came from one division: AI memory. There are only three companies globally capable of producing HBM (High Bandwidth Memory): two in South Korea (Samsung and SK Hynix) and one in the US (Micron). Every time AI performs inference, it must re-read the entire model weight, requiring 10 to 20 times more memory than consumer-grade products, and that demand doubles with each new model generation. Meanwhile, producing 1 GB of HBM consumes the equivalent capacity of 4 GB of standard DRAM, directly crowding out memory supply for phones and PCs, with Apple's across-the-board price hikes being a direct consequence.

The paradox: Memory companies are posting record profits and prices are still rising, yet their stocks collectively fell into a bear market. Samsung dropped 9% on earnings day, and SK Hynix fell 15%. The two hosts believe this is a combination of "sell the news" events and cyclical panic, with no change to the fundamentals. SK Hynix is listing on Nasdaq via ADR, raising approximately $30 billion with 4x oversubscription, and Leopold Aschenbrenner participated as a seed investor.

Highlighted Insights

The profit margins from the memory monopoly crush everything.

"Samsung's gross margin is 52%, SK Hynix is 72%. For every $100 of memory sold, $72 goes directly to the bottom line. For comparison, Apple's hardware gross margin is around 30%."

"Samsung memory division employees received annual bonuses equivalent to 6 times their annual salary. Luxury goods sales in South Korea have tripled in the past four months."

AI is a memory black hole.

"AI is essentially a black hole for memory, more extreme than any consumer or enterprise tech wave we've ever seen."

"Every time you submit a prompt, whether it's ChatGPT or Claude, it has to re-read the entire model weight. Every single time."

"Each new model requires 10 to 20 times more memory than its predecessor. With models at 15 trillion or 20 trillion parameters, this demand will only go up."

The price surge isn't over yet.

"Prices rose 90% in Q1, another 50% to 60% in Q2, and another 20% expected in Q3. Samsung earned more money in one year than it did in the previous 40 years combined."

Record profits, yet stocks fell into a bear market.

"Samsung beat earnings expectations, posting a single-quarter profit higher than NVIDIA. Then its stock dropped 9%. SK Hynix dropped 15%."

"Meta hinted at cutting back AI capital expenditures. Honestly, they haven't really produced anything useful yet."

"If you bought a month ago, it looks pretty foolish now. But 6 to 24 months from now, these companies will still be very strong businesses."

Main Body

Samsung: The Misunderstood King of AI Profits

Josh: Samsung just became the most profitable company globally, but almost no one knows exactly how they make their money. I used to think of Samsung for smartphones and computers, but actually, 96% of their profit comes from one division: memory. The memory market has only three main suppliers, and two of them happen to be in South Korea. Two of the world's most profitable companies in the same country – what's going on, EJ? How did Samsung do it?

EJ: When I was young, I only knew Samsung as a phone seller. Over the past year and a half, I've constantly heard its name linked with AI, and I was curious about what the company actually does. Let's look at some numbers. Samsung's Q2 profit was $58.5 billion, beating analyst expectations of $55 billion by $3 billion. More importantly, they crushed NVIDIA, which had only $53 billion for the same period. A year ago, Samsung's Q2 2025 profit was just $3.4 billion. From $3.4 billion to $58.5 billion in one year – what happened in between?

The answer is HBM, High Bandwidth Memory. Samsung is currently the second-largest global HBM supplier. Why is HBM so valuable? Because every GPU NVIDIA sells, every TPU Google makes, any AI chip requires massive amounts of memory. Note the word "massive." Consumer devices (laptops, PCs) have predictable memory needs, but AI's memory demand is exponential.

Samsung makes $650 million a day, $27 million an hour, $7,500 a second. That's more than the world's most valuable companies make. Yet Samsung isn't the world's most valuable company, which is quite interesting.

The Memory Triopoly and the HBM Monopoly

Josh: Computers need two things: a workbench (memory) and a filing cabinet (storage). Globally, only three companies can make these things.

EJ: Right. Three types of memory, each with its own use. DRAM is like the DDR5 in your computer, the workbench, temporary RAM, cleared when you shut down. NAND is your SSD, flash storage in your iPhone, the filing cabinet, slower but cheaper. Then there's HBM, High Bandwidth Memory, which is everything in the AI era.

Manufacturing HBM is incredibly complex. DRAM chips are stacked like skyscrapers, 12 to 16 layers high, using extremely precise processes. SK Hynix holds 60% of the entire HBM market. Any AI chip made will likely use their memory. The monopoly of these three companies is established, and profit margins are inflating accordingly.

Josh: Here's a very intuitive number. 1 GB of HBM consumes wafer capacity equivalent to 4 GB of standard DRAM. This means every time a wafer is turned to produce AI memory, four times the capacity for phone and PC memory disappears. Apple raised prices across the board for the first time: MacBook Air from $1100 to $1300, MacBook Pro from $1700 to $2000, Mac Studio from $4000 to $5300. Because people buying Mac Studios need to run local inference, requiring enormous memory, and there simply isn't enough.

AI is a Memory Black Hole

EJ: If I had to explain in one sentence why everyone is so bullish on these companies: AI is essentially a black hole for memory, more extreme than any tech wave we've ever seen.

You write a prompt and submit it, whether it's ChatGPT or Claude, every time it has to re-read the entire model weight. What are model weights? They are the parameters those companies spent billions of dollars training. Every inference requires re-reading them. And each new model requires 10 to 20 times more memory than its predecessor. With models at 15 trillion or 20 trillion parameters, the demand will only keep pushing higher.

But this isn't even the biggest part. Your chatbot remembering what you said last time, remembering your information across conversations – that temporary storage falls under NAND flash, and demand there is equally huge. So all three types of memory demand are being pulled to the max simultaneously.

Some people say this is a bubble that will burst. Historically, there is some truth to that; the memory industry has always had cycles. Three years ago, SK Hynix almost got acquired by Micron – that was the absolute bottom of the cycle. They invested in HBM, not knowing if they could sell it, and Micron almost bought them. They didn't sell, doubled down on HBM, and now they are the most valuable company in South Korea.

The Price Surge: A Ladder from 90% to 20% Increases

EJ: Let's look at the prices. Pricing history of SK Hynix and Samsung over the past 6 months: Q1 was up 90%. The memory inside your everyday phone or PC suddenly doubled in price because one component surged nearly 100%. Q2 was up another 50% to 60%. Samsung is raising prices another 20% in Q3.

Samsung earned more money in one year than it did in the previous 40 years combined, 19 times more than the same period last year.

In terms of gross margins, a grocery store makes $3 for every $100 in sales, an automaker makes $7, Apple hardware makes $30. Samsung is at 52, SK Hynix is at 72. For every $100 of memory sold, $72 goes straight to the bottom line. Samsung memory employees receive annual bonuses equivalent to 6 times their annual salary. Luxury goods sales in South Korea have tripled in the past four months. In Taiwan, people are borrowing $60,000 at high interest rates to buy TSMC stock. Crazy things are happening in the Asian AI market.

Josh: This increase is brutal. Consumers are already paying the price. A 32GB memory module is 2 to 3 times more expensive than last year. To build a computer, one-third of the cost is now memory. These price increases are already transmitting to the real consumer market. The question is: how long can this last? Can they keep raising prices?

EJ: It depends on one variable: whether the number of people using AI will continue to increase. This is the only proxy metric to measure whether memory demand will keep growing. If you believe in the future where everyone runs multiple AI agents, using AI for work and life, then memory demand is exponential.

What about the supply side? New fabs won't be ready for production until 2030. These fabs are designed with extreme precision; you can't just flood the supply in the short term. Demand is outpacing supply by 3 to 5 times, and supply constraints will persist for several years. In China, CXMT is producing similar DRAM and HBM, but all their capacity is being consumed by domestic Chinese AI labs. Apple tried to find alternative suppliers in China, but there's no stock.

Another argument is: what if a new model architecture emerges that doesn't require so much memory? I think the logic is exactly the opposite. If memory becomes cheaper, more use cases become viable, more AI agents are deployed, and overall economic output increases. The demand for memory will actually be even greater.

The Paradox: Record Profits, Stocks in Bear Market

Josh: We've been very bullish on memory. Since recommending Micron late last year, it's up 150%. But recently, all memory stocks have dropped over 20% from their highs. A technical bear market. Samsung beat earnings expectations on earnings day, posting a single-quarter profit higher than NVIDIA, and then dropped 9%. SK Hynix dropped 15%. Profits are at record highs, prices are still rising, but the market is saying "slow down."

What might have scared the market is Meta hinting at cutting back AI capital expenditures. Honestly, though, they haven't really produced anything useful yet. This is the strange point we're at: companies are saying "we're doing great, record profits, strong demand," while the market is saying "wait, this has run up too much, there are unknown risks." How do you see it?

EJ: My assessment is simple: this is just selling the news. Earnings season just ended. Global funds have heavy positions in these stocks and are looking for a good price to re-enter. If you think I'm just being stubborn, I understand. But if you are a long-term AI investor, memory is essential, and only these three companies can produce it – this landscape won't change in the short term.

People are worried about the cycle. During the last memory super-cycle in 2017-2018, Micron's PE ratio went down to 4 or 5, then the stock dropped 60%, even while profits were still rising. History does seem to be repeating, but the difference this time is: the last cycle was driven by smartphones, where you could predict the demand ceiling. This time it's AI-driven, and the demand ceiling is not visible.

There's also an interesting historical detail. During the bottom of the last cycle, when memory was cheapest, who was aggressively pressuring prices and hoarding memory? Apple. Apple had pricing power over Samsung and SK Hynix, forcing them to supply DRAM and HBM at the lowest prices. Now the tables have turned. Samsung and SK Hynix are doing what Apple did back then. In an efficient market, this is perfectly normal.

SK Hynix Lists on Nasdaq

Josh: Next up is a major test. SK Hynix is a South Korean company, but on July 10th, it listed on Nasdaq via ADR, raising approximately $30 billion. This is a key moment for the memory industry. How the US market prices SK Hynix will determine the next phase of the memory trade. EJ, will you participate?

EJ: Short answer: yes. I am bullish on memory. I hold Micron and also a DRAM ETF (a basket of memory companies). If you are a US citizen, buying Korean stocks directly is inconvenient, but you can allocate through these basket products. I've been waiting for SK Hynix to come to the US market for a long time and will buy it.

The IPO is currently reported to be 4x oversubscribed. Institutions, pension funds, retail investors are all scrambling for it. An IPO of this size shows that institutions have done deep research on the memory sector and intend to hold long-term.

Josh: Guess who contributed $2 to $3 billion of that $30 billion? Leopold Aschenbrenner. He's back again. Last time we did an analysis of his portfolio, some questioned his logic for shorting NVIDIA. Subsequently, NVIDIA dropped 20% from when we recorded that episode. Now he's also participating as a seed investor in SK Hynix's IPO. You can question his judgment, but he hasn't missed yet.

Long-term Perspective: Super Cycle or Bubble?

Josh: Let's conclude. In the long term, there is no ceiling for memory demand, only these three companies can make it,