Samsung Hits Three-Year High as AI Boom Boosts Chip Profits

Samsung Electronics’ stock surged to its highest level in three years on Friday, driven by a forecasted 15-fold increase in its second-quarter operating profit, fueled by the global artificial intelligence (AI) boom that has significantly boosted demand for advanced computer chips. Shares of Samsung Electronics, the flagship arm of the South Korean conglomerate Samsung Group, climbed by 3% on Friday, closing at 87,100 Korean won (approximately $63) per share. This peak represents the highest valuation for Samsung Electronics since early January 2021 and follows the company’s announcement of its second-quarter profit outlook for this year.

The tech giant has projected an operating profit of approximately 10.4 trillion Korean won (about $7.5 billion) for the second quarter of 2024. This marks a dramatic increase from 670 billion won (roughly $500 million) in the same period last year, exceeding analysts’ expectations and showcasing a remarkable 15-fold rise from a year ago. This forecast also surpasses the first-quarter profits of 6.61 trillion won ($4.8 billion).

Samsung anticipates generating around 60 trillion won ($43.5 billion) in sales revenue during the second quarter of this year, reflecting a nearly 25% increase compared to the same period last year. The surge in Samsung’s stock value is largely attributed to its semiconductor division’s strong performance. As one of the world’s largest computer chip manufacturers, Samsung has benefited significantly from the booming demand for AI technologies. This surge in demand has driven up the prices for high-end chips used in AI products and data centers.

Samsung’s expected growth is closely tied to the broader AI boom, particularly the rising interest in generative AI technologies, such as ChatGPT, Gemini, Claude, and Copilot. The increased demand for these advanced chips has been instrumental in Samsung’s financial recovery from the downturn experienced during the COVID-19 pandemic. This AI-driven growth trend is not unique to Samsung. Other technology and chip companies have also seen substantial gains. Notably, Nvidia, a U.S. chipmaker, has seen its market value soar from a niche hardware provider mainly serving gamers to one of the world’s most valuable companies, with a market capitalization exceeding $3 trillion. Although Nvidia briefly held the title of the world’s most valuable public company, it now ranks third behind Microsoft and Apple.

Samsung has yet to provide a detailed breakdown of its anticipated second-quarter earnings, but the impressive forecast is likely attributed to the robust performance of its semiconductor unit. The company is expected to release a comprehensive earnings report by the end of July, which will provide further insights into its financial performance. As the AI industry continues to evolve and expand, the demand for high-performance chips is expected to remain strong, potentially leading to sustained growth for companies like Samsung that are at the forefront of this technological revolution. Investors and industry analysts will be closely watching Samsung’s detailed earnings report and any subsequent updates that might reveal more about the company’s future prospects in this rapidly growing market.