Samsung share hits record high as AI boom lifts profits
What's the story
Samsung Electronics has posted its biggest quarterly profit in over three years, driven by a surge in demand for AI-related memory chips. The South Korean tech giant reported an operating profit of about 12.1 trillion won ($8.5 billion) for the September quarter, beating analysts' expectations of 9.7 trillion won, according to a preliminary earnings report. Revenue also rose by around 9% to 86 trillion won during this period.
Market response
Shares surge by 3% in early trading
Samsung's shares have surged by as much as 3.1% in early trading on Tuesday in Seoul, following the release of its impressive earnings report. The company is set to release a full financial statement detailing net income and divisional breakdowns on October 30. The strong results are likely to boost investor confidence in the continued demand for AI servers and memory chips, as well as Samsung's potential to reclaim market share from smaller rival SK Hynix Inc.
Market recovery
Operating profit exceeded expectations
According to Sanjeev Rana, head of research at CLSA Securities Korea, Samsung's operating profit exceeded expectations. He noted that the company's high-bandwidth memory shipments have recovered significantly, rising 70% to 80% from the previous quarter. Rana also hinted that potential writedowns in the foundry business may have been smaller than expected. This recovery is a key part of Samsung's strategy to capitalize on an anticipated AI boom in the coming years.
Strategic moves
Strategic moves to capitalize on AI boom
Samsung has made significant strides with its latest high-bandwidth memory (HBM) chips, securing an order from Advanced Micro Devices Inc. The company is also awaiting final approval on HBM3E chips from NVIDIA Corporation. These strategic moves come as investors hope that Samsung can catch up to SK Hynix in the lucrative HBM market for AI applications.
Share performance
Share price rally since June
Since early June, Samsung's shares have surged by over 60%. This rally is largely due to signs of recovery in its key semiconductor division, which usually contributes 50% to 70% of the company's annual profits. Earlier this month, both Samsung and SK Hynix signed agreements to supply chips for OpenAI's Stargate project. The demand projection was more than double the current global capacity of HBM, highlighting Stargate's scale and accelerating global AI development.
Market position
Samsung may have reclaimed top memory maker position
MS Hwang, research director at Counterpoint, said Samsung may have reclaimed its position as the top memory maker by revenue after AI-related investments boosted prices and sales volumes of general-purpose DRAM and NAND. However, he cautioned that the volume impact of its HBM3E shipments to NVIDIA is still limited. To regain its previous market leadership, Samsung needs to carry this momentum into its next-generation product, HBM4.