Quarterly profit for Samsung Electronics Co., Ltd. surged to 19 times the year-ago level, exceeding expectations, driven by soaring demand for memory chips used in artificial intelligence data centers.

Shares in the company fell as much as 7.9% in Seoul trading as investors had largely priced in the chipmaker's robust profitability, which has been propelled by a historic global expansion in AI infrastructure. The preliminary operating profit for the three months ending June was 89.4 trillion won ($58 billion), about 6% above forecasts, while revenue more than doubled to 171 trillion won.

As the world's largest memory chipmaker, Samsung's performance is closely watched as investors seek justification for the massive AI-related investments and lofty valuations. Earlier this year, global semiconductor stocks soared to record highs but have since become volatile, with concerns over intensifying competition, potential overcapacity, and the return on trillions of dollars in investment plans taking precedence.

A full financial statement, including net profit and segment breakdowns, is expected from Samsung around the end of the month.

"We will be looking for signs of whether this represents a sustainable step-change in the company's annual free cash flow generation capability," said Brian Cho, a portfolio manager at Causeway Capital Management, who added that he would also be monitoring the company's shareholder return policy.

Industry executives, including those from Nvidia and OpenAI, have previously noted that memory chip shortages remain a critical bottleneck for AI development. Manufacturers are prioritizing production of high-end memory to meet data center demand, consequently leading to tight supply for traditional memory.

Analysts anticipate this shortage will persist at least through the end of 2027, granting Samsung and its rivals, SK Hynix and Micron, significant pricing power. This dynamic has already driven average selling prices for DRAM up more than 40% and NAND flash prices up over 50% quarter-on-quarter in the second quarter, according to HSBC.