What Happened?
A number of stocks fell in the morning session after Samsung Electronics' record quarterly profit triggered a textbook "sell-the-news" reaction, compounded by a Reuters report that China's DeepSeek is developing its own AI inference chip.
Samsung's preliminary Q2 operating profit of 89.4tr won ($58.4B) surged 1,810% year-over-year, with revenue up 129% to 171tr won, beating consensus. Memory names had run enormously into the report so a blowout that merely confirmed the AI memory supercycle gave holders every reason to lock in gains suggesting the good news was already in the price.
Second, DeepSeek's chip revived the structural fear that custom silicon erodes Nvidia's moat. The project is early-stage and constrained by US export controls on advanced foundries and high-bandwidth memory, but it stacks onto OpenAI's Broadcom-built "Jalapeño" inference chip and Anthropic's early talks with Samsung on a 2nm accelerator, a pattern of AI labs designing around Nvidia over time.
Lastly, there is the AI-bubble question: Morgan Stanley told clients earlier in the week the rally was "nearing its end," expecting "more capex discipline." Risks ahead include SK Hynix's ~$28bn Nasdaq debut which could pull institutional capital from Micron and related peers, while heavy insider selling and Michael Burry's disclosed MU short added overhangs.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor Manufacturing company FormFactor (NASDAQ: FORM) fell 10.2%. Is now the time to buy FormFactor? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Penguin Solutions (NASDAQ: PENG) fell 8.4%. Is now the time to buy Penguin Solutions? Access our full analysis report here, it’s free.
- Memory Semiconductors company Western Digital (NASDAQ: WDC) fell 9.1%. Is now the time to buy Western Digital? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Applied Materials (NASDAQ: AMAT) fell 9.7%. Is now the time to buy Applied Materials? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company KLA Corporation (NASDAQ: KLAC) fell 8.4%. Is now the time to buy KLA Corporation? Access our full analysis report here, it’s free.
Zooming In On FormFactor (FORM)
FormFactor’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. But moves this big are rare even for FormFactor and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 3.4% on the news that it received a $24 million grant from the Texas IC fund for its new probe card site.
Probe cards are used to test semiconductor wafers during the manufacturing process. This grant supports the expansion of the company's production capabilities in Texas. The positive news was amplified by broader market strength, as U.S. stocks pointed to a higher open, with tech-heavy Nasdaq-100 index showing notable gains, suggesting a positive sentiment for technology-related stocks.
FormFactor is up 82.3% since the beginning of the year, but at $107.91 per share, it is still trading 30.4% below its 52-week high of $155.08 from April 2026. Investors who bought $1,000 worth of FormFactor’s shares 5 years ago would now be looking at an investment worth $3,061.
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