Samsung Electronics is anticipated to announce preliminary operating profit of 84.3 trillion won ($55.1 billion) for the quarter ending June, an 18-fold increase from the prior year and surpassing its total profit for 2025. Revenue is expected to reach a record 169 trillion won, marking a 127% surge. This strong performance comes as the market questions both demand and supply in the memory trade, with Dave Mazza of Roundhill Financial noting that these results could solidify confidence in Samsung.
The booming demand for high-bandwidth memory (HBM) chips required for training and running large AI models like Anthropic's Claude and OpenAI's ChatGPT has led to a global supply crunch. This shortage has significantly increased prices, boosting margins for chipmakers such as Samsung and SK Hynix. Average DRAM selling prices climbed over 40% in the April-June quarter, with NAND prices jumping more than 50%, according to HSBC Holdings Plc. Analysts remain bullish, with an average price target implying a 52% upside for Samsung's stock over the next 12 months, and Citigroup Inc. raising its target to 530,000 won from 460,000 won, a 71% increase from Friday's close.
Despite recent market concerns about potential overcapacity and competition, Citigroup analysts led by Peter Lee believe memory fundamentals are strong, with server DRAM pricing outperforming due to robust CPU demand. Valuations also remain attractive, with Samsung's stock trading at only 5.7 times its 12-month forward earnings, near an all-time low compared to Micron's 7 and the Philadelphia Semiconductor Index's nearly 24. While the rally in global semiconductor shares faced turbulence in June, Samsung's results are highly anticipated to provide validation for the AI trade.
Looking ahead, Samsung Group and SK Group plan to invest 800 trillion won to build two chipmaking plants each to rapidly expand capacity. Additionally, Anthropic is reportedly in discussions with Samsung to become a manufacturing partner for a custom AI chip. Fund managers like Jian Shi Cortesi of Gam Investment Management caution that a deceleration in memory price hikes could signal downside risks. However, the preliminary earnings are viewed as a critical catalyst for global chip stocks, offering insights into HBM demand and pricing, with detailed results expected later in July.
