Samsung Is Expected to Report an 18-Fold Increase in Profits Due to Demand for Memory Chips — Analysts

South Korean tech giant Samsung may report record second-quarter profits in its preliminary earnings report, which it will release on July 7. Analysts agree that the semiconductor memory manufacturer’s profits will surge approximately 18-fold year-over-year amid the ongoing AI boom.

According to an LSEG SmartEstimate survey of 30 experts cited by Reuters, Samsung’s operating profit for the April–June quarter is expected to reach 86 trillion won ($56.35 billion), compared with a modest 4.7 trillion won a year earlier.

At the same time, the average estimate from analysts compiled by Bloomberg points to a preliminary operating profit of 84.3 trillion won ($55.1 billion). According to the agency, this result would also set a historic record, eclipsing Samsung’s total profit for all of last year, while the company’s total revenue would jump 127% to 169 trillion won ($110 billion).

Samsung’s strong profit growth reflects a severe shortage in the global semiconductor market. Demand for the infrastructure needed to train and operate large AI systems far outpaces factory capacity, according to Bloomberg. LSEG analysts believe this imbalance will persist at least until the end of next year.

The AI boom has sparked massive demand for ultra-fast HBM memory, a market where Samsung currently lags behind its competitor, SK Hynix. However, the increasing complexity of AI systems has sharply driven up demand for standard DRAM and NAND chips as well, and Samsung maintains its leadership in this segment, Reuters explains. The company is strengthening its position as a key supplier to market leaders—from Nvidia to consumer ecosystem builders such as Google and Apple.

Data from Citi Research and HSBC clearly illustrate the scale of this demand: in the second quarter alone, the average market price of DRAM soared by more than 44%, and that of NAND by more than 50%, compared with the start of the year, according to Reuters. This allowed Samsung and SK Hynix to post record profit margins, the agency notes.

The rapid rise in prices triggered a massive rally in the stock market: since the beginning of the year, Samsung Electronics’ shares have soared 165%, while those of its main competitors, SK Hynix and Micron, have risen 260% and 242%, respectively. As a result, the AI boom has pushed the market value of each of the three largest memory manufacturers above the $1 trillion mark.

In June, however, the stocks of all three companies were volatile, Bloomberg notes. Concerns about growing competition, a possible excess of capacity, and—most importantly—the actual return on massive investments in AI led to sharp market declines, the agency reports.

Samsung's preliminary report, expected on Tuesday, will be a "key catalyst" for the entire global technology sector: it is expected to reveal the true level of demand and prices for the scarce HBM memory, Bloomberg explains.

Samsung will present a detailed final report at the end of July.

“Shares of memory manufacturers traditionally peak several months before memory prices themselves hit their cyclical ceiling. A slowdown or stabilization in the rate of growth of chip prices could signal a decline in stock prices,” warns Jian Shi Cortezi, fund manager at Gam Investment Management.

Despite the positive market conditions, LSEG analysts warn that Samsung’s actual second-quarter profits may fall short of forecasts due to employee payouts, according to Reuters. In May, Samsung’s management reached an agreement with the labor union: the company committed to allocating 10.5% of its semiconductor division’s operating profit to special bonuses for employees. According to some experts, the total reserves set aside for these payments could exceed 40 trillion won ($26 billion), Reuters noted.

The second risk is potential delays in AI infrastructure investments by key customers—major cloud providers—Reuters notes. Investors are increasingly skeptical about whether customers will be able to sustain this pace of spending for long, JPMorgan warned. Memory already accounts for 52% of cloud companies’ capital expenditures this year and will exceed 70% next year.

However, despite the risks, major brokerages remain optimistic, according to Bloomberg. The average target price for Samsung shares suggests a further 52% increase over the next 12 months. Last week, Citigroup raised its price target for the company’s stock to 530,000 won—71% above the closing price on Friday, July 3.

This article was AI-translated and verified by a human editor