Samsung earnings spike 1,800% — but why are Asian stocks cooling?

Asian stocks fell on Tuesday as investors locked in profits from this year's artificial intelligence (AI)-driven rally, with a blockbuster earnings outlook from Samsung Electronics failing to prevent a broad sell-off in technology shares while a weak Japanese yen and lingering geopolitical risks kept market sentiment cautious.

MSCI's broadest index of Asia-Pacific shares outside Japan fell about 0.7%, while Japan's Nikkei shed more than 1% and South Korea's Kospi led regional losses after heavyweight chipmakers came under pressure.

The retreat came despite Samsung Electronics forecasting a 19-fold surge in second-quarter operating profit to a record level, underscoring continued strong demand for high-bandwidth memory chips used in artificial intelligence servers.

The gains at Samsung eased worries over a tech retreat over the past few weeks amid questions over whether the vast sums pumped into AI will see suitable returns.

South Korean titan Samsung appeared to have answered some of those Tuesday as it said it expected to post a more than 1,800% jump in second-quarter operating profit, thanks to sustained AI-driven demand for memory chips.

However, the company's shares tumbled around 7% in early trade, dragging the Kospi index down five percent and deepening a rout that has hammered the market for the past two weeks.

The Kospi had more than doubled this year to a record high in June, but has shed around 20 percent since then.

Investors instead focused on lofty valuations after a powerful run-up in semiconductor stocks, sending Samsung shares sharply lower and weighing on the broader market.

The market is taking a breather after an exceptional first half, analysts note, and investors are increasingly questioning how much further AI-related stocks can climb after months of outsized gains.

Japan's Nikkei was also pressured by technology losses, while the yen hovered near multi-decade lows against the US dollar, keeping traders alert for any signs of intervention from Japanese authorities.

The weaker currency continues to support exporters but has heightened concerns over imported inflation.

In China and Hong Kong, shares were relatively resilient, though investors remained cautious ahead of key economic data and fresh policy signals from Beijing aimed at supporting growth.

The regional pullback followed overnight gains on Wall Street, where US equities advanced on optimism over corporate earnings and expectations that softer US economic data could reduce pressure for tighter monetary policy.

Investors are now awaiting minutes from the U.S. Federal Reserve's latest meeting for clues on the path of interest rates.

Oil prices edged higher as traders continued to monitor tensions involving Iran and shipping through the Strait of Hormuz, although prices remained well below the peaks seen during this year's conflict in the Middle East. Gold eased slightly, while the US dollar firmed against a basket of major currencies.

The latest shares market decline extends a more cautious tone that has emerged across Asian markets after foreign investors sold regional equities at a record pace during the first half of 2026, raising questions over whether the AI-led rally can be sustained through the remainder of the year.