AI Demand Powers Samsung’s Biggest Profit Surge in Years
Synopsis
The report, published on Friday, priced Samsung Electronics’ operating profit forecast for Q2 2026 at 89.4 trillion Won ($58.44 billion), marking a Samsung Q2 record-high, and a 19-fold profit jump vs the prior year.…
The report, published on Friday, priced Samsung Electronics’ operating profit forecast for Q2 2026 at 89.4 trillion Won ($58.44 billion), marking a Samsung Q2 record-high, and a 19-fold profit jump vs the prior year. Shares were down 7.9% in Seoul as investors speculated on the future of chip boom powered by AI.
For Australian investors Samsung remains a core global technology holding through international exchange traded funds and superannuation funds, Samsung has become a bit of a guinea pig for semiconductor and AI demand worldwide, with no similar comp name on the ASX.
Record Earnings Failed to Reassure Investors
South Korea’s Samsung Electronics Co Ltd, the world’s largest maker of memory chips, forecast an operating profit of 89.4 trillion won for the three months ended in June, versus 4.7 trillion won a year earlier and above analysts’ prediction of 87.3 trillion won.
However, rival SK Hynix pulled back heavily alongside Samsung shares, with falling 7.3%, weighing on South Korea’s KOSPI index.
Analysts cited that the strong results were largely priced in, while growing fears of an AI bubble dent stocks further as investors worry overall U.S. technology spending on AI infrastructure would slow down for major players.
Memory Chip Prices Keep Going Up
Samsung’s earnings were lifted by AI demand which drove strong memory chip prices from high-bandwidth memory (HBM) to ASMLI conventional DRAM and NAND chips used in smartphones, PCs and enterprise servers.
According to Citi Research in the second quarter, average selling prices (ASP) for DRAM and NAND jumped 44% and 53%, respectively, quarter-on-quarter. Excluding employee bonus provisions for analysts, they estimated Samsung’s operating profit would have surpassed the 100 trillion won-threshold.
Samsung Galaxy S10 design revealed in new case leakSamsung’s memory business will likely continue as the company’s biggest breadwinner, but its foundry and logic chip arms may see losses deepen.
Spending outlook for AI still biggest risk
Analysts said the biggest unknown about the semiconductor industry is how much future AI infrastructure will be built. Some of these include delays to U.S. data centre construction due to labour shortages or financing pressures, which could weaken demand across the AI hardware supply chain.
Earlier this month, Goldman Sachs projected that Meta, Microsoft, Amazon and Alphabet will spend US$5.3 trillion combined on capital expenditure related to AI from 2025 to 2030 based on the enduring expectations of long-term demand against volatile market circumstances in the short term.
Samsung will release full second quarter earnings along with divisional results on July 30.
Source: Reuters
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