The Truth About Samsung's Earnings: What They Won't Tell You
In a Nutshell
Samsung's strong earnings and AI-driven memory chip demand boosted profits, but the broader market sold off amid geopolitical risks and rising oil prices. Despite Micron and SK Hynix benefiting from AI spending, leverage and margin trading led to investor losses as prices dropped sharply. The core message warns against using leveraged products at record highs, urging direct long-term ownership over aggressive tactics in a cyclical, overbought market.
These notes were generated by AI and may contain inaccuracies.
Samsung announced its earnings during Korean market hours, triggering reactions in memory chip stocks. The Nasdaq market appeared strong until these earnings were released, after which it began declining and selling off. The market reaction will determine the opening direction for tomorrow's trading session.
The Pentagon has instructed the US military to end preparations for the possible resumption of major combat operations. US and Israeli sources indicate that fighting may occur before the midterm elections. A White House official stated that Trump has all options available at any time. On Friday, Trump's national security team met at Camp David and discussed the possibility of resuming major combat operations against Iran. Brent crude prices are trading above $101 a barrel, with the observation that uncertainty in the Middle East causes oil prices to rise, which could lead to higher inflation, particularly affecting the Consumer Price Index data report.
Jim Paulsen, a Wall Street expert, predicts that the S&P 500 index may still fall by 15% in 3 to 5 months.
Samsung announced impressive profits, achieving almost 10 times their net profits compared to last year. Memory chip companies including Micron and SK Hynix showed significant price movements, with Micron experiencing a large upward price gap in extended hours. SK Hynix rose sharply but then began selling off following Samsung's announcement.
Memory chip companies are major beneficiaries of artificial intelligence expansion. Companies like Oracle, Meta, and Google spend billions on AI infrastructure, with this money flowing to memory chip manufacturers. While major cloud computing companies experience negative free cash flows, memory companies show positive cash flows and are making huge profits.
Samsung is one of the best-performing stocks in the Korean market, which is mainly focused on Samsung and SK Hynix. Korean investors have lost $1.7 billion in the last three months alone due to trading in leveraged index funds.
Micron is considered one of the top three performing stocks for 2026. However, in the recent three-month period, it fell from $1,250 to lows of $700, representing a 42% decrease. Adding triple leverage to this volatility explains why investor positions can be liquidated, particularly when trading on margin.
Even with the best-performing stocks showing real and impressive growth, individual investors and traders are being liquidated due to leverage usage. The recommendation is to invest directly in companies like Micron without using margin or leveraged funds. If only one share can be afforded, buy only one share rather than using aggressive leveraged positions.
Leveraged index funds are not investment vehicles. The problem lies in the choice of investment method rather than the market itself. These companies tend to be very profitable in the long run, and investors have tremendous potential for success without using aggressive approaches.
Memory chip companies face concerns about Toshiba's announcement earlier this week regarding a possible increase in supply, which could lead to increased competition and shrinking net profit margins. Samsung reported revenues of $133 billion and net income of $84 billion, demonstrating they are making substantial profits.
If competition and supply increase, profit margins will shrink and stock prices will likely reflect this change. This represents the cyclical aspect of the memory chip industry. Caution is advised against using leverage at overbought levels, especially given current market conditions with record highs, high bond yields, and the Federal Reserve's announcement of possible interest rate increases in 2026.
Markets can remain irrational for longer than investors can remain solvent, but this doesn't mean investors should act irrationally at irrational times. The risk is becoming too greedy at peak buying levels and losing all gains earned during the year.
MicroStrategy (MSTR) declined by about 6% or nearly 7% with heavy selling pressure.
The LPP program offers live trading sessions that last between 30 minutes and an hour, fully recorded for members. Members who joined since 2018 paid once for lifetime access and continue to watch live trading. The cost is $1.30 per day as a one-time payment for lifetime access. A recent live session is available to preview before joining.
The approach favors waiting for good deals rather than short-term opportunities. If the Nasdaq and S&P 500 start to decline, all stocks are expected to follow downward, creating better entry opportunities. The preference is to wait for potential market declines rather than invest aggressively in the current environment.
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