Samsung Electronics Co., Ltd. reported record preliminary second-quarter profits, but concerns over capital expenditure and end-market demand sent its shares lower, with the market having already priced in the strong performance.

On Tuesday, the company's shares closed down nearly 7%. The earnings report showed preliminary operating profit for the second quarter reached 89.4 trillion won (approximately $584 billion), up from 57.2 trillion won a year earlier. Revenue for the April-June quarter was 171 trillion won, higher than the 133.9 trillion won reported for the same period last year.

An analyst from eToro commented that the stock had already rallied over recent months in anticipation of historic earnings for the quarter. While the final figures were impressive, they did not significantly exceed market expectations, failing to provide enough of a positive surprise to attract fresh buying. The trading action reflected a classic "sell the news" event.

The analyst added that market sentiment was dampened by concerns that the current pace of capital expenditure related to AI infrastructure may not be sustainable. The recent rise in memory chip prices has been supported by this high level of investment, and any shift in that expectation weighs on the share price.

The reported earnings already accounted for a one-time expense related to employee bonuses. Earlier this year, following weeks of union protests demanding a fairer distribution of profits, Samsung conceded, removing a cap on bonuses set at 10 times base salary and pledging to allocate 10.5% of its operating profit to staff bonuses.

A research director from Counterpoint noted that various headwinds are accumulating, with multiple parties seeking a share of the substantial profits, including unions demanding bonuses and the Korean government increasing related requests. Beyond this, memory chip prices have risen significantly, leading to market apprehension about whether downstream demand can absorb these higher costs.

The director stated that based on monthly tracking of memory chip prices across consumer electronics, mobile devices, and servers, prices are still rising across the board, and this upward trend is expected to persist at least through the current quarter.

The director also pointed out that Samsung's announcement of plans to build a large new semiconductor wafer fab in southern Korea has put additional pressure on the stock. The new site is in a remote, undeveloped location, requiring infrastructure to be built from scratch. This layout is seen as suboptimal by investors, with the market generally viewing the location as unsuitable for high-end, precision semiconductor manufacturing.

Furthermore, the upcoming U.S. listing of American Depositary Receipts by domestic rival SK Hynix this week is seen as diverting investor interest and capital.

The eToro analyst added that the concurrent listing of SK Hynix ADRs is creating a rotation of funds away from Samsung, further suppressing its share price performance.