Samsung Electronics witnessed a significant jump in its stock price, reaching its highest level since January 2021. The surge came after the South Korean tech giant announced better-than-expected profits for the second quarter. Riding on the wave of explosive demand for artificial intelligence, Samsung’s shares climbed by 2.24% to 86,500 Korean won ($62.73), according to LSEG data.
Impressive Growth
The company projected an operating profit of about 10.4 trillion won ($7.54 billion) for the April to June quarter, a staggering increase of 1,452% from the previous year. This figure exceeded the LSEG estimate of 8.51 trillion won. Moreover, Samsung forecasts 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. The positive outlook is in line with the 73.7 trillion won estimated by LSEG analysts.
Samsung’s strong performance can be attributed to the rebound in the memory chip market, driven by the surge in demand for artificial intelligence. The company, known as the world’s largest memory chip maker, experienced record losses in 2023 due to the Covid-induced slump in demand for memory chips and electronics. However, with the resurgence of memory chip prices and the increasing popularity of AI technology, Samsung has been able to turn its fortunes around.
Focus on AI Innovation
Samsung has been focusing on generative AI, with its Galaxy S24 Ultra smartphone featuring advanced AI capabilities for editing photos and conducting online searches. The company expects the second quarter to be primarily driven by the demand for generative AI, while mobile demand remains stable. Despite the positive outlook, Samsung has faced challenges in HBM production, which has impacted its supply to Nvidia.
HBM chips, crucial for AI chipsets, have seen a surge in demand amid the AI boom. Samsung’s delay in HBM production has led to constraints in its supply to Nvidia, a key player in the AI industry. Despite the setback, Samsung continues to benefit from its dominant market share and high ASP (average selling price) in the memory chip market. The company is expected to release detailed second-quarter results later this month, shedding more light on its performance and future prospects.
Samsung Electronics’ impressive growth in the second quarter underscores the company’s resilience and ability to capitalize on emerging trends in the tech industry. With a strong focus on AI innovation and a rebound in the memory chip market, Samsung is well-positioned to maintain its momentum and drive further growth in the coming quarters.
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