Samsung Electronics has forecast a 19-fold jump in its quarterly profits, driven by insatiable global demand for artificial intelligence memory chips – yet its shares tumbled almost 7% in Seoul on Tuesday as some investors had hoped for an even stronger performance.
In its earnings guidance released ahead of a full report due later in July, the South Korean technology giant said it expects to post an operating profit of 89.4tn won (£43.6bn; $58.4bn) between April and June – its third consecutive record quarterly operating profit. Revenue during the period came in at roughly 171tn won, more than double the amount for the same quarter last year.
“Samsung expects a 1,800% profit jump driven by AI chip demand, yet shares fell 7% as investors hoped for more.”
The projected earnings mark one of “the best quarterly performances ever”, close to the tech sector record set by Nvidia earlier this year, said industry analyst Marc Einstein from Counterpoint Research. “This has everything to do with the AI boom as memory companies continue to ride a tidal wave driven by limited supply and unprecedented demand,” he added.
Samsung has hiked prices on its memory chips as supplies remain tight. Research firm IDC said demand for semiconductors used in data centres and other AI infrastructure has been “different from anything the memory industry has navigated”, squeezing the supply of chips for everyday electronics. IDC’s tech devices researcher Bryan Ma warned: “We do expect supplies to be tight through next year given the unabated demand from AI data centres.”
Despite the record numbers, Samsung’s shares fell by almost 7%, a sign that some investors had expected even higher profits. The company’s stock market value has more than doubled since the start of the year, while local rival SK Hynix has jumped by more than 200%. The strong performance of both firms has helped lift South Korea’s benchmark Kospi index by more than 80% this year.
Samsung, one of the world’s biggest semiconductor manufacturers, makes chips for companies including Nvidia and Google, in addition to its own line of electronic devices. In May, Nvidia posted record quarterly sales and profits, but its stock also fell at the time – a move some analysts attributed to growing investor concern about rising competition in the sector.
In June, South Korea unveiled plans for at least $880bn of investments in projects led by Samsung and SK Hynix to expand the country’s chip manufacturing capacity in the coming years. The question now, as AI demand shows no sign of easing, is whether the sector’s breakneck growth can sustain the sky-high expectations that continue to move markets.