Samsung Electronics was once the dominant player in a type of semiconductor known as memory, putting it in a great position to capitalize on the boom of artificial intelligence.

But the South Korea electronics giant has now fallen behind its long-time rival SK Hynix in next-generation chips that have been key component for AI silicon leader Nvidia. The result? Samsung’s profit has plunged, around $126 billion has been wiped off its market value, according to data from S&P Capital IQ, and an executive issued a rare public apology about the company’s recent financial performance.

Memory is a critical type of chip used to store data, and it can be found in a plethora of devices from smartphones to laptops. For years, Samsung was the undeniable leader in this technology, ahead of South Korean rival SK Hynix and U.S. competitor Micron.

But as AI applications such as OpenAI’s ChatGPT rose in popularity, the underlying infrastructure required to train the huge models they rely on became a bigger focus. Nvidia has emerged as the top player in this space with its graphics processing units (GPUs) that have become the gold standard used by tech giants for AI training.

A crucial part of that semiconductor architecture is high-bandwidth memory, or HBM. This next generation of memory involves stacking multiple dynamic random access memory (DRAM) chips, but it had a small market before the AI boom.

That’s where Samsung got caught out and failed to invest.

“HBM has been a very niche product … for a long time and Samsung has not focused its resources on its development,” Kazunori Ito, director of equity research at Morningstar, told CNBC by email.

“Due to the difficulty of the technology involved in stacking DRAMs and the small size of the addressable market, it was believed that the high development costs were not justified.”

SK Hynix saw this opportunity. The company aggressively launched HBM chips which were approved for use in Nvidia architecture and, in the process, the South Korean firm established a close relationship with the U.S. giant. Nvidia’s CEO even asked the company to speed up supply of its next generation chip, underscoring the importance of HBM to its products.

SK Hynix posted record quarterly operating profit in the September quarter.

“With strong R&D (research and development) investments and established industry partnerships, SK Hynix maintains an edge in both HBM innovation and market penetration,” Brady Wang, associated director at Counterpoint Research, told CNBC by email.

Samsung told CNBC that, in the third quarter, total HBM sales grew more than 70% quarter-on-quarter. The tech giant added that the current product known as HBM3E is in mass production and generating sales.

The South Korean tech company noted that development for its next-generation HBM4 is “underway according to plan” and that the company is targeting starting “mass production” in the second half of 2025.

AppLovin shares soared 45% on Thursday after the online gaming and advertising company issued guidance that was well above estimates and reported better-than-expected earnings and revenue.

The stock jumped past $245 in early afternoon trading. It’s now up 515% this year, far outpacing all other tech companies valued at $5 billion or more, according to FactSet data. The rally has lifted AppLovin’s market cap to over $80 billion.

Revenue in the third quarter climbed 39% to $1.2 billion, topping the $1.13 billion average estimate, according to LSEG. Earnings per share of $1.25 exceeded the 92-cent average estimate.

For the fourth quarter, AppLovin sees revenue of $1.24 billion to $1.26 billion, representing growth of about 31% at the middle of the range. Analysts were expecting about $1.18 billion.

Founded 12 years ago, AppLovin went public in 2021, riding a Covid-era wave of excitement in online games. Now, the company’s games unit generates relatively slow growth, but its online ad business is bustling from advancements in artificial intelligence that have improved ad targeting.

AppLovin attributes much of its growth to its AI advertising engine called AXON, particularly since releasing the updated 2.0 version last year. The technology helps put more targeted ads on the mobile gaming apps the company owns, and it works for other studios that license the software.

The company said software platform revenue in the quarter increased 66% to $835 million, driven by improvements in AXON’s models.

“As we continue to improve our models our advertising partners are able to successfully spend at a greater scale,” the company said in a letter to shareholders.

While revenue is increasing at a rapid rate, Wall Street is most attracted to AppLovin’s profitability. Net income in the quarter increased 300% to $434.4 million, or $1.25 a share, from $108.6 million, or 30 cents a share, a year earlier. The software platform had an adjusted profit margin of 78%.

“AppLovin continues to impress with outsized revenue growth and incredible EBITDA conversion,” analysts at Wedbush wrote in a report on Thursday. They recommend buying the stock and increased their price target from $170 to $270.

AppLovin CEO Adam Foroughi, whose net worth swelled on Thursday by more than $2 billion to about $7.4 billion, provided an update on the company’s pilot e-commerce project. The technology allows businesses to offer targeted ads in games.

“In all my years, It’s the best product I’ve ever seen released by us, fastest growing, but it’s still in pilot,” Foroughi said on the earnings call. E-commerce “is looking so strong that it’s something that we think will be impactful to the business financially in 2025 and then for the long-term.”

— CNBC’s CJ Haddad contributed to this report

WATCH: AppLovin is ‘killing Unity’

As Donald Trump celebrated his presidential victory early Wednesday morning, Elon Musk was right there with him.

“A star is born. Elon,” Trump said onstage at his Mar-a-Lago resort, thanking the world’s richest person for spending two weeks campaigning in Pennsylvania.

Musk, who poured at least $130 million into a pro-Trump campaign effort, turned Trump support into yet another full-time job in recent months, funding a swing-state operation to register voters and using his social media platform X to constantly tout his preferred candidate, frequently with misinformation.

Musk’s investment in Trump is already paying off, even though Trump doesn’t take office until Jan. 20.

Tesla shares soared 15% on Wednesday, adding roughly $15 billion in paper value to Musk’s net worth. The electric vehicle maker faces headwinds in the global market from China-based competitors, declining European sales and consumers’ growing distaste for his political views.

But with Musk cozying up to Trump, and the president-elect promising to slash the types of regulations that Musk abhors, Wall Street is betting Tesla, on balance, will be a beneficiary.

For Musk, the potential gains go well beyond Tesla.

During his victory speech, Trump also praised Musk’s SpaceX and thanked Musk for delivering Starlink Wi-Fi terminals to Hurricane-stricken parts of the U.S. That all leaves Musk with plenty of reasons to be optimistic that a second Trump administration will pay healthy dividends to him and his businesses.

Musk’s companies are currently embroiled in a range of probes and lawsuits from federal agencies pertaining to matters including alleged securities law violations, workplace safety, labor and civil rights violations, violations of federal environmental laws, consumer fraud and vehicle safety defects.

Given the executive branch’s outsized control over federal regulatory bodies, Musk can look forward to regulators and intelligence agencies winding down some or all of the 19 known ongoing federal investigations and lawsuits against Tesla, SpaceX and X, formerly known as Twitter.

At New York’s Madison Square Garden on Oct. 27, Musk was one of many Trump fans and surrogates to speak during an all-day rally. Much of the coverage of the event focused on comedian Tony Hinchcliffe’s bigoted quips, including his description of Puerto Rico as a “floating island of garbage.”

Musk was introduced by Cantor Fitzgerald CEO Howard Lutnick, who called the Tesla CEO the “greatest capitalist” in U.S. history. Lutnick said he and Musk were co-founders of the envisioned “Department of Government Efficiency” and he asked Musk how much he thought could be cut from the federal budget.

Musk answered “at least $2 trillion,” which is more than the federal government’s discretionary budget of $1.7 trillion. The remark received a scream from Lutnick and applause from the crowd.

Musk didn’t specify what he sought to cut, but he previously accused agencies including the SEC, Environmental Protection Agency and Federal Aviation Administration of regulatory overreach or infringing on his free speech rights.

He also accused the Biden administration of hiring too many IRS personnel, and has vocally objected to a so-called billionaires tax.

Having a role in a bespoke commission could give Musk power over federal agencies’ budgets, staffing and the ability to push for the elimination of inconvenient regulations.

Musk also said during a Tesla earnings call on Oct. 23, that he intended to use his sway with Trump to establish a “federal approval process for autonomous vehicles.” Currently, approvals happen at the state level.

Tesla has been working on driverless technology for more than a decade but hasn’t yet produced a robotaxi or vehicle safe to use without a human ready to steer or brake at any time.

Additionally, a Trump administration may agree to ramp up the government’s work with his companies.

Musk’s newest startup, xAI, is developing large language models and generative artificial intelligence software that aims to compete with similar products from Microsoft-backed OpenAI, Meta and others. 

Meta recently announced its open-source Llama models were available to U.S. government agencies in the areas of defense and national security. And OpenAI is already working with the U.S. military after adding a retired U.S. Army general and former director of the National Security Agency to its board in June.

Musk didn’t respond to a request for comment.

Regulatory credits were about 60% of Tesla’s net income in the second quarter of 2024, and 39% in the third quarter. Other government rebates on EV sales represented about 50% of Tesla’s third-quarter profit.

Trump hasn’t made clear whether he’ll maintain those rebates and regulatory credit programs. He previously said he may cut the federal $7,500 EV tax credit.

Additionally, Trump has promised to slash income taxes and to implement steep tariffs. While tariffs could help protect Tesla from Chinese competitors, such a move could involve significant disruption to Tesla’s automotive supply chain, which relies on some materials and parts from China.

When it comes to worker protections, Musk has been seeking to strike down the constitutional authority of the National Labor Relations Board through litigation. He may find such lawsuits are no longer needed if Trump is willing to eliminate or reduce the power of the agency, which is supposed to ensure that companies follow federal laws allowing workers to form unions and engage in collective bargaining with their employers.

Then there’s Musk’s involvement with sanctioned governments.

At SpaceX, Musk has withheld the use of Starlink, the company’s satellite internet service, over Taiwan, even for U.S. troops based there. The Wall Street Journal reported that Musk cut off access as a favor requested by Russian President Vladimir Putin allegedly on behalf of Chinese President Xi Jinping during a series of ongoing, frequent talks between the two men.

In response to the reports, NASA Administrator Bill Nelson said if they were true, Musk’s conversations with Putin should be be federally investigated.

According to analysis by NBC News, Musk has repeatedly posted pro-Kremlin content to his hundreds of millions of followers on X. He even engaged with content from Tenet Media and its creators at least 60 times on the social network. Tenet was at the center of an alleged Russian covert operation to manipulate U.S. public opinion ahead of the 2024 election, according to the Department of Justice. 

While Vice President-elect JD Vance recently called Putin a U.S. adversary, Trump has frequently spoken of his affection for the Russian president, even since Russia’s devastating invasion of Ukraine in 2022. Kremlin officials have celebrated Trump’s victory in this week’s election.

Musk, who publicly endorsed Trump moments after the first assassination attempt on the former president in July, has said he intends to remain involved in U.S. politics for the long haul.

He said in a discussion on X on Tuesday that his super PAC would continue its work after the presidential election and would seek to influence the outcomes of midterms, intermediate elections and elections of local prosecutors across the U.S.

A priority, Musk said, would be to help elect district attorneys “who prosecute repeat violent criminals who are obviously a danger to people.”