The stock of Samsung Electronics reached its highest level since January 2021 following the announcement of better-than-expected profits for the second quarter. The South Korean tech giant saw an increase in its stock price by as much as 2.24% on Friday morning, trading at 86,500 Korean won ($62.73) according to LSEG data. This surge came after Samsung revealed that its operating profit for the April to June quarter is projected to be about 10.4 trillion won ($7.54 billion), a substantial jump of about 1,452% from the previous year.
In its guidance released on Friday, Samsung indicated that it anticipates revenue for the second quarter to be between 73 trillion to 75 trillion won, an increase from 60.01 trillion won a year ago. This optimistic outlook is attributed to the explosive demand for artificial intelligence, particularly in the field of generative AI. The company foresees that the second quarter will be driven primarily by this demand for AI, while mobile demand remains stable.
Samsung has made significant investments in generative AI, showcased in products like the Galaxy S24 Ultra smartphone. This technology enables features like photo editing and online item searching through AI algorithms. The company’s focus on this sector has contributed to its profit growth, as AI chipsets and memory chips have experienced high demand due to the AI boom.
Despite the positive earnings surprise, Samsung faces challenges in HBM (high-bandwidth memory) production, impacting its supply to companies like Nvidia. The delay in qualifying for use in Nvidia’s AI processors has posed a setback for Samsung in the advanced memory chip market. However, the company leverages its market share and capacity to maximize profits through higher average selling prices.
The resurgence in demand for memory chips and electronics, driven by AI applications, has benefited Samsung Electronics and other major players in the memory chip market. The company’s capacity for innovation and adaptation to market trends positions it well for future growth and expansion.
Samsung Electronics’ recent success is a testament to its strategic focus on emerging technologies like AI. Despite challenges in certain sectors like HBM production, the company’s ability to capitalize on market demand and drive innovation has led to impressive financial performance. As Samsung continues to unveil new products and solutions in the AI space, its position as a leading tech giant remains strong.