Today's session flipped the script from the day before. Yesterday brought strength in tech and a rebound in chip names that had been under pressure the prior week. Today that move reversed, and the trigger sat in Asia.
Samsung's Earnings and the Memory-Chip Pullback
Samsung reported overnight, and the numbers were strong. Revenue more than doubled year-over-year and rose over 27% on a sequential quarter-over-quarter basis. The backlog is deep, and the demand-versus-supply imbalance that has defined this cycle held up. Plenty of companies would take performance like that in a heartbeat.
Even so, the stock fell. Samsung dropped over 7%, and the Kospi pulled back about 5%. The clearest reason is that the bar going into the report sat extremely high. Memory chip names have run in a near-parabolic move over the past several months, the kind of run that leaves investors feeling they already missed it. Earnings kept supporting those advances, but valuations climbed to elevated levels, so what looks like weakness may simply be a reset.
Underneath the headline, spending is the sore spot. Samsung is expanding its plants in southern Korea, and building out and enlarging those fabs to meet demand costs heavily. Capex moved up, and that has become a concern going forward. Whether an 8% drop counts as a disaster depends entirely on when you got in and how you manage risk, and whether you're overweight the sector to begin with.
The weakness spread. SK Hynix shares slid overseas, and the selling leaked into Micron, Western Digital, Seagate, and SanDisk. Another factor pressuring Samsung specifically: SK Hynix ADS begin trading on the NYSE this Friday, which may be pulling some of the luster and capital away. Context still matters here. The Kospi is up roughly 90% so far this year, and essentially two stocks, Samsung and SK Hynix, are driving all of that. Dips in this group have been bought before.
Chips Beyond Memory
The pressure wasn't confined to memory. Nvidia fell about 2%, tied to reports that DeepSeek is looking at supplying its own chips and moving away from high-end AI silicon. AMD and Intel had rebounded the prior day, but that gain gave way to the same rotation trade that has been cycling for weeks, now turning to the downside.
Away from tech, the Dow and the Russell 2000 showed some strength. The Dow settled at a record high yesterday, and the VIX closed at one-month lows. The NATO summit just getting underway in Turkey could inject some volatility and prompt sector movement depending on the comments that come out of it.
Oil and the Strait of Hormuz
Crude climbed toward $69 a barrel after trading below $68 just a day earlier, and geopolitics is the reason. Reports out of the region said Iran fired two missiles in the Strait of Hormuz, striking an LNG ship. There were no casualties, but the vessels suffered significant damage.
That kind of headline is not a positive for the energy backdrop or for equities sitting at or near all-time highs. If this drags on, with Iran possibly angling to charge tolls for passage through the strait and stepping back from the pause in hostilities, it raises real concern for equity markets heading into earnings season. It adds confusion at an already sensitive moment. The hope is that talks resume soon.
SpaceX Joins the NASDAQ 100
SpaceX was added to the NASDAQ 100 today, following its recent addition to the Russell 1000. The mechanical effect is that funds and ETFs tracking those benchmarks have to buy the shares. The pull is limited, though. SpaceX will carry a weight of just over 1%, landing around number 21 on the NASDAQ 100, far behind Nvidia and the other large-cap tech names in the index. That ranking will likely temper near-term buying from investors mimicking the NASDAQ 100 and the QQQ.
A wave of analyst initiations hit the stock today. Price targets ran all the way up to 800 from one firm. Morgan Stanley stood out with a $300 target over the next 12 months. Stock lockups are still set to expire over the next few months, which raises the question of what that added supply will do. The shares initially rallied yesterday morning, then finished roughly flat and dipped negative by about 3%.
Expect volatility. The stock could see moves of $10 to $20 on a daily basis as investors pick their entry and exit points and weigh the valuation against the company's yearly revenue, which looks outsized at these levels. The float is thin, only about 4% to 5% of shares outstanding, so depth and liquidity are limited. The options market is already pricing in those swings, so anyone trading it should be prepared.
Cybersecurity Breaks Out
Cybersecurity had a strong day, and CrowdStrike led it, hitting new highs and indicating higher in the pre-market. What CEOs at Palo Alto and CrowdStrike have described reverses the earlier fear that AI would eat into their business. AI is doing the opposite, opening more opportunities for hackers and driving more demand for security.
The growth rates back that up, running anywhere from 20% to 35% for most of the major companies. CrowdStrike, Palo Alto, and Fortinet all set record highs in yesterday's march higher. Okta received an upgrade that cited its cybersecurity growth, which lent it some support. This is the same sector rotation at work, with investors picking the areas positioned to benefit as AI infrastructure gets built out. Security demand rises alongside it because the threats will only keep ramping up, and that is where investor attention is landing.
