(Jan 7): A stock rally that has added US$350 billion ($448.41 billion) in market value for Samsung Electronics Co since the start of last year may have more room to run as bullish analysts eye record profits.
Its shares are beating those of SK Hynix Inc so far in 2026, after three years of stark underperformance as the smaller rival gained favour with key customer Nvidia Corp. Now expectations of progress in artificial intelligence (AI) along with huge price hikes for memory chips are driving calls that “Samsung is back”.
Samsung shares rose as much as 4% on Wednesday after Nvidia chief executive officer Jensen Huang highlighted a “completely unserved” market for AI data storage. The gains came just a day ahead of a preliminary earnings report on Thursday, which is expected to show quarterly profit more than doubled.
“Samsung was at a discount because it was left behind,” said Kang DaeKwun, the chief investment officer of Life Asset Management Inc. in Seoul. “But I see a lot of catching up happening this year,” said Kang, whose fund has maximised its exposure to Samsung heading into 2026.
Analysts polled by Bloomberg estimated that Samsung’s earnings will more than double in 2026 to a record high of about US$60 billion, on a par with projections for Taiwan Semiconductor Manufacturing Co (TSMC). Still, the South Korean firm’s market capitalisation of US$560 billion is less than half that of TSMC, Asia’s most valuable company.
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Multiple catalysts
Samsung is seen closing in on a deal to supply the latest version of its high-bandwidth memory (HBM) chips to Nvidia, a long-awaited development that could boost its valuation.
At the same time, ravenous demand for HBM has dented production capacity for more conventional memory products, a segment that Samsung dominates. As a result, prices have soared for legacy DRAM used in more traditional servers as well as PCs and smartphones.
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“We anticipate a severe supply shortage in commodity memory in 2026,” with price growth accelerating on incremental use related to AI, Citigroup Inc analyst Peter Lee wrote in a note last week. He lifted his price target for Samsung to a street-high of KRW200,000 ($177.20).
In terms of other catalysts, the firm’s presentation of new products including AI-enabled TVs at the CES technology conference in Las Vegas generated some buzz this week. There are also hopes for improvement in Samsung’s foundry business, though it still lags far behind leader TSMC.
Valuation appeal
Shares of Samsung more than doubled last year, although that performance pales in comparison to the gains in SK Hynix and other AI darlings. As investors turn more finicky, there’s risk of a pullback on any earnings disappoint or talk of bubbles.
Jung In Yun, the chief executive officer of Fibonacci Asset Management Global, said that while there is scope for outperformance in Samsung’s stock if it successfully catches up in HBM, “expectations are already high, maybe too optimistic”. Management touting “Samsung is back” comments from customers is “an expression of confidence rather than clear evidence of an earnings inflection”.
Still, Samsung’s profit estimates for the next 12 months are up 115% since the end of September, beating increases of 88% for SK Hynix and 16% for TSMC. That’s helped lower Samsung’s forward price-earnings ratio to 10 times from a high of more than 25 times in 2023.
“The current memory upcycle looks stronger than ones in the past, so there is potential for Samsung to exceed previous valuation highs,” said Vey Sern Ling, the managing director of Union Bancaire Privee.
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