Samsung broke the record for quarterly profits in the tech sector. Why are its shares down?
The record profit did not inspire investors, but it promises generous bonuses for employees in the memory division
Samsung's third-quarter operating profit increased nearly ninefold, but investors reacted by selling their shares / Photo: OleksSH / Shutterstock.com
Samsung Electronics, the world’s largest supplier of memory chips, reported a nearly ninefold increase in operating profit for the third quarter—reaching a record high for the global tech sector. However, its stock price fell. The South Korean giant failed to dispel investors’ doubts that the boom in the AI memory market will continue in the coming years, according to the Financial Times.
A Sale Despite the Record
According to the company’s preliminary estimates, Samsung’s operating profit for the third quarter was 107.4 trillion won (about $80.2 billion), while revenue totaled 195 trillion won. This marks the fourth consecutive quarterly record, according to Reuters. From July through September, the company earned more than twice as much as it did in all of 2025, according to calculations by The Wall Street Journal.
During trading in Seoul on October 8, Samsung shares fell 2.4%. Since their June high, the shares have lost more than 25%. Estimates of how closely operating profit matched forecasts vary. Reuters reports a “slight beat” of the LSEG consensus, the WSJ reports that it was generally in line with expectations, and Bloomberg reports that it fell short of the average analyst forecast.
On the other hand, employees of Samsung’s memory chip division have reason to celebrate, notes Nikkei: the South Korean giant has agreed to allocate 10.5% of the division’s operating profit toward their bonuses. According to local media reports cited by the publication, the average payout will be 750 million won ($560,000) if the company’s annual operating profit reaches 370 trillion won.
What's Worrying Investors
Investors aren’t just evaluating Samsung’s quarterly results: they want confirmation that the upswing in the memory market will continue in the coming years, explains Albert Yeon, managing partner at Petra Capital Management. “They’re more concerned about when the industry will peak and whether the previous cycle of sharp ups and downs will repeat itself,” the FT quotes him as saying.
The market expects Samsung’s quarterly profit growth to slow from 20% in the third quarter to 8.2% in the fourth: memory prices are rising at a slower and slower pace, according to Reuters. The agency cites a TrendForce forecast, according to which contract prices for standard RAM in the fourth quarter may rise by 10–15% compared to the third quarter, whereas growth in the second quarter was 60%.
Chipmakers Expect the Boom to Continue
Meanwhile, memory manufacturers remain optimistic: Samsung and Micron claim that supply will still fail to keep up with demand in 2028, according to Reuters. “We expect the memory shortage to be more severe next year than it is this year. New long-term contracts are being signed at higher prices than existing ones,” says Kim Yeon-gon, an analyst at Mirae Asset Securities (quoted by the FT).
Long-term contracts reduce price volatility and make the ups and downs in the industry less severe, explained SK Securities analyst Han Dong-hee. According to Han, the shift to long-term contracts may smooth out profit peaks for memory manufacturers but extend the period of high earnings and thereby “maximize total cash flow.”
Citigroup analysts attribute the potential for further growth in Samsung’s profitability to HBM4—cutting-edge high-speed memory for AI accelerators. The bank’s forecast pertains to the 12-layer version: its price could rise by 100–150% next year, according to Bloomberg. However, Citi has lowered its estimate for the company’s annual profit due to the strengthening of the won, which reduces the value of dollar-denominated export revenue when converted to the local currency.
Analysts recommend buying
According to the WSJ, 39 analysts have a positive outlook on Samsung’s stock (Buy and Overweight), two are neutral (Hold), and none recommend selling it. The average target price of 489,878 won ($365.45) implies an upside potential of 82.45% relative to the closing price on October 7 (268,500 won).
“Samsung is currently significantly undervalued,” Bloomberg quotes Neil Shah, vice president of research at Counterpoint, as saying. He links the company’s prospects for next year to HBM: in his assessment, this segment has not yet delivered all of the expected financial returns. Samsung plans to publish detailed financial results, broken down by business segment, on October 29.
This article was AI-translated and verified by a human editor
