Samsung Electronics is expected to announce a substantial increase in its second-quarter operating profit, with estimates suggesting an 18-fold jump from the previous year. Analysts project the company's operating profit to reach approximately 84.3 trillion Korean won (about $55.1 billion) for the April-June quarter, significantly surpassing last year's profit and even exceeding its total profit for 2025. This projected surge is largely attributed to the booming demand for high-bandwidth memory (HBM) chips crucial for AI systems, leading to a global supply crunch and higher chip prices.
The robust demand has caused average DRAM selling prices to climb more than 40% and NAND prices to jump over 50% in the second quarter, according to HSBC Holdings Plc. Analysts remain optimistic about Samsung's stock, with an average price target implying a 52% upside over the next year. Citigroup Inc. recently raised its target to 530,000 won from 460,000 won, suggesting a 71% increase from Friday's close, reassuring investors that memory fundamentals are intact despite concerns about AI computing capacity.
Despite the strong financial outlook, some investors harbor concerns about the sustainability of the AI memory market. JPMorgan noted that while memory supply-demand fundamentals are tight, the rapidly rising share of AI memory in cloud service providers' capital expenditure, estimated at 52% this year and over 70% next year, raises questions. The recent volatility in global chip shares has heightened the stakes for Samsung's earnings report, as investors seek validation for the AI trade.
Nomura anticipates a continued rise in commodity DRAM and NAND prices, with projected increases of 24% and 25% respectively in the July-September quarter, fueled by demand from consumer memory products and data centers. However, potential delays in AI infrastructure investment are seen as the biggest risk to the current memory boom. Samsung and SK Hynix have pledged massive investments totaling 3,200 trillion won (about $2.07 trillion) to expand chip capacity, with Samsung's investment planned between 2026 and 2040.
Analysts from Citi Research reported that average selling prices for DRAM and NAND rose 44% and 53% quarter-on-quarter, respectively, in the second quarter. The ongoing memory shortage has significantly boosted share prices for memory chipmakers, with Samsung Electronics, Micron, and SK Hynix soaring 158%, 242%, and 273% respectively this year. Samsung's mobile business, however, faces increasing cost pressures due to rising memory prices, which have somewhat offset recent handset price increases.
