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Retail investors are losing money in the stock market due to a questionable recommendation from major securities firms to buy shares in Samsung Electronics, even as the company seems to be falling behind in the global competition for the artificial intelligence (AI) chip market.

The chip giant closed at 59,200 won ($43.23) on the benchmark KOSPI on Friday, reflecting a decline of 32.57 percent from its annual high of 87,800 won recorded on July 10 during intraday trading.

This decline occurred as Samsung Electronics, the market leader, remains dependent on traditional, lower-margin chips, while high-margin chips used in AI servers are crucial in the global chip market.

Accordingly, the company posted a lower-than-expected operating profit of 9.1 trillion won in the third quarter. It was 12.8 percent down from three months earlier, and fell significantly short of brokerage consensus at 10.77 trillion won.

Despite this, no major brokerage houses have advised investors to sell Samsung Electronics stocks, according to corporate tracker FnGuide. Instead, they maintain their longstanding recommendation to buy the stocks.

As of Friday, 24 securities firms cited their reasons for recommending the stock, projecting that Samsung Electronics will recover and set an average target price of 90,783 won.

This projection contrasts with that of Morgan Stanley, a global investment bank, which lowered Samsung Electronics' target stock price by 27.6 percent — from 105,000 won to 76,000 won — in its report released on Sept. 15.

“I made a wrong decision by putting my trust in domestic securities firms,” said Kim Bok-min, a retail investor who owned shares in Samsung Electronics since the COVID-19 pandemic era.

“I sold half of the shares in July this year, and I keep regretting not selling (the) other half as well back then because I thought the company would surpass 100,000 won by the year-end,” he said.

Jung Eui-jung, head of the Korean Stockholders' Alliance, said that retail investors may suffer bigger losses as foreign investors opt to dump Samsung Electronics stocks.

This trend raises concerns about the potential for additional price declines, given the influence of foreign investors on the market.

According to the Korea Exchange, foreign investors sold Samsung Electronics stocks for a record 28 straight trading days as of Friday, totaling net sales of 11.58 trillion won, which contributed to an 18.3 percent drop in the stock price during that period. Meanwhile, individual investors net purchased 10.8 trillion won worth of shares, but their buying was insufficient to halt the downward trend.