Samsung Electronics Co’s shares touched a fresh record after it reported its biggest quarterly profit in more than three years, reflecting surging AI-related demand for memory chips.
South Korea’s largest company said it earned an operating profit of around 12.1 trillion won (US$8.5 billion) in the September quarter, beating analysts’ projection for 9.70 trillion won, according to a preliminary earnings report. Revenue rose around 9% to 86 trillion won.
Its shares extended gains, climbing as much as 3.1% Tuesday morning in Seoul. The company will provide a full financial statement with net income and divisional breakdowns on Oct 30.
The results may bolster confidence among investors betting on the durability of demand for AI servers and memory chips, as well as Samsung’s chances at regaining ground it’s lost to smaller rival SK Hynix Inc. following years of setbacks.
“Samsung’s operating profit was much bigger than anyone was expecting,” said Sanjeev Rana, head of research at CLSA Securities Korea. “Its high-bandwidth memory shipments have recovered, rising 70% to 80% from the previous quarter, and there is a possibility that the size of the writedowns in the foundry business was much smaller than expected.”
Samsung is seeking to ride an anticipated AI boom in coming years. It’s made progress with its latest HBM chips, securing an order from Advanced Micro Devices Inc. while awaiting final approval on HBM3E chips from Nvidia Corp.
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Investors are betting that Samsung can also catch up to SK Hynix in the lucrative market of HBM to Nvidia and others for AI applications. Samsung’s shares have surged more than 60% since early June, buoyed by signs of recovery in its pivotal semiconductor division, which typically accounts for 50% to 70% of the company’s annual profits.
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This month, both Korean industry linchpins struck agreements to supply chips to OpenAI’s Stargate project. Their projection for demand represented more than twice the current global capacity of HBM, underscoring Stargate’s enormity and quickening global AI development.
That, together with rising memory chip prices, has prompted dozens of analysts to lift their price targets for Samsung recently.
Samsung may have reclaimed its spot as the top memory maker in terms of revenue after AI-related investments bolstered prices and sales volumes of general-purpose DRAM and NAND, said MS Hwang, research director at Counterpoint.
But the volume impact of its HBM3E shipments to Nvidia remains limited, he cautioned. “To regain its previous market leadership, Samsung needs to carry this momentum into its next-generation product, HBM4,” he said.
Samsung’s advances come after a series of development missteps allowed SK Hynix to take a huge lead in the high-margin AI arena.
Samsung said during its most recent earnings call in July that it expects “meaningful expansion” in high-end memory products for servers in the second half of the year. Earnings should improve steadily as the year progresses, Chief Financial Officer Park Sooncheol said at the time.
