End of losses: Samsung shares jump on Nvidia CEO's words on new AI chips
Despite orders from Apple and Tesla, Samsung's contract business has generated multimillion-dollar losses in recent years
Samsung began producing not only memory chips for Nvidia's AI chips, but also the AI chips themselves / Photo: RYO Alexandre / Shutterstock.com
Quotes of Samsung Electronics, the most expensive company in South Korea, rose sharply at the auction in Seoul. The excitement among investors was caused by the statement of the head of Nvidia Jensen Huang that Samsung's division on the production of chips to order engaged in the manufacture of new AI-chips Nvidia. Expanded cooperation with the main beneficiary of the artificial intelligence boom will allow Samsung to return its deeply unprofitable contract business to profitability.
Details
Samsung Electronics shares rose 5% after the head of Nvidia said that the South Korean company has started producing new AI logic output processors for them, Reuters reports. "I want to thank Samsung, which is producing the Groq LP30 chip for us, and they are working hard," Huang said while introducing the new product at Nvidia's GTC developer conference in California.
He explained that the Groq LP30 will be integrated into Nvidia's next-generation Vera Rubin AI platform, and shipments will begin in the second half of this year. Thus, Samsung is taking its partnership with Nvidia to a new level. While previously the Asian giant was only a supplier of ultra-fast memory (HBM) for Nvidia's AI gas pedals, it has now become a contract manufacturer of the AI chips themselves, according to South Korea's Maeil Business Newspaper.
What the analysts are saying
The deal with Nvidia has boosted stock market hopes that Samsung's contract business, which makes chips for Tesla, Apple and Samsung's own mobile devices, is capable of returning to profitability after multi-billion dollar losses in recent years, Reuters reported, citing industry experts.
Samsung's custom chip division will be able to break even by the end of 2027, predicted Heungkuk Securities analyst Song In-joon. The risk factor for the financial performance of Samsung's contract business, he called the weakening demand for cell phones due to the sharp rise in the cost of memory chips, the shortage of which may persist until 2030.
What Wall Street thinks of Samsung stock
The consensus rating for Samsung in 2026 holds at "buy" (Buy), according to FactSet. According to the service, 36 experts out of 40 now recommend to increase the position in the shares of the South Korean giant. FactSet's average target price of 251 thousand won per paper ($168.6) implies a 28% upside potential.
This article was AI-translated and verified by a human editor
