Samsung Electronics shares rose 4.8% on Tuesday after the South Korean technology giant forecast a record quarterly profit amid strong demand for artificial intelligence chips. Shares later pared gains and closed 1.76% higher.
In its preliminary earnings guidance, Samsung projected its operating profit for the January-March quarter to reach 57.2 trillion won ($37.8 billion), more than eight times higher than 6.69 trillion won a year earlier.
If this gain comes to fruition, it would represent a quarterly record – nearly tripling. previous high — and will surpass the 42.3 trillion won estimate from LSEG SmartEstimate, which is based on analysts’ forecasts that are consistently more accurate.
Meanwhile, the company’s estimated consolidated revenue was projected to reach 133 trillion Korean won, up nearly 70% from a year earlier.
“Samsung Electronics’ first-quarter revenue and operating profit have reached the scale of global Big Tech competitors,” MS Hwang, research analyst at Counterpoint Research, told CNBC.
Samsung’s upbeat guidance was likely driven by its memory chip business, particularly demand for high-bandwidth memory chips used in AI computing.
Demand for high-bandwidth memory chips has been so explosive over the past year that it has created a shortage in the memory market, leading to huge increases in prices and quantities for memory makers like Samsung.
According to Counterpoint’s Hwang, with commodity memory prices projected to continue rising more than 50% in the second quarter, supply tightness is unlikely to ease any time soon.
The results also show Samsung is strengthening its position in high-bandwidth memory chips after giving up an early lead to its South Korean rival SK Hynix.
Samsung’s Device Solutions division, which includes memory chips, is projected to account for 39% of Samsung’s revenue and 57% of its operating profits in 2025.
The company is expected to report full earnings later this month. Despite Samsung’s upbeat projections, the company may face some headwinds this year from the ongoing conflict in the Middle East.
The US-Israeli war against Iran has disrupted shipments of materials critical to semiconductor manufacturing, including helium, increasing the risk of manufacturing disruptions for companies like Samsung and SK Hynix.
“If the Middle East conflict ends quickly, it will not have a significant impact on profits. However, if it continues for several months or longer, it will have serious consequences,” Hwang said.
