Samsung Electronics saw its shares soar to the highest level in over five months after the South Korean tech giant announced better-than-expected profit forecasts for the second quarter of the year. The stock price surged by 2.24% on Friday morning, reaching 86,500 Korean won ($62.73) and marking a significant increase from the previous day’s closing price of 84,600 won.
Samsung’s operating profit for the April to June period is anticipated to hit around 10.4 trillion won ($7.54 billion), showcasing a remarkable 1,452% growth compared to the previous year’s 670 billion won. This figure surpassed the 8.51 trillion won estimate issued by LSEG, a positive sign for investors. Additionally, the company foresees its revenue for the second quarter to be in the range of 73 trillion to 75 trillion won, up from 60.01 trillion won a year ago, aligning with LSEG analysts’ expectation of 73.7 trillion won.
Following significant losses in 2023 due to a decline in demand for memory chips and electronic devices post-Covid, Samsung’s business recovered this year amid a surge in memory chip prices driven largely by the growing demand for artificial intelligence technologies. As a key player in the memory chip market, Samsung’s products are integral components in various consumer electronics such as smartphones and computers.
In its forward-looking strategy, Samsung has emphasized the importance of generative artificial intelligence, with a particular focus on the upcoming release of the Galaxy S24 Ultra smartphone featuring advanced AI capabilities for photo editing and online item search functionalities. While AI-driven innovations are expected to be a key revenue driver for Samsung, the company also noted stable demand in the mobile sector.
Despite the positive outlook, challenges lie ahead for Samsung as it faces delays in high-bandwidth memory (HBM) production, impacting its supply to Nvidia, a major player in the AI chipset market. This delay in qualifying for use in Nvidia’s processors could potentially hinder Samsung’s growth in the AI segment, which has been a significant source of revenue for the company.
The surge in Samsung Electronics’ shares reflects investor confidence in the company’s ability to capitalize on the growing demand for AI technologies. While Samsung anticipates releasing detailed second-quarter results later this month, the market will closely monitor the company’s performance in overcoming production challenges and maintaining its position as a key player in the global semiconductor industry.
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