Samsung is planning to take a prominent position in the global semiconductor scene and placing a major bet on it, based on its AI strategy.
Despite some unsatisfactory results in the past year, the tech giant is poised for significant growth as investors recognize the potential of AI to drive demand for NAND and high-bandwidth memory (HBM), areas where Samsung holds a substantial market share.
Samsung Electronics has announced a remarkable surge in operating profits for the first quarter, projecting a staggering increase of over 900 per cent compared to the previous year. This upsurge is primarily attributed to the rebound in chip prices.
As the leading conglomerate in Asia’s fourth-largest economy, Samsung Electronics stands as the flagship subsidiary of the renowned South Korean conglomerate, Samsung Group.
According to a regulatory filing by the tech giant, operating profits for January-March are anticipated to reach 6.6 trillion won ($4.89 billion), marking a significant leap from around 640 billion won recorded in the same period last year.
The projected figures surpassed expectations, exceeding the average estimate by 20.5 per cent, as reported by South Korea’s Yonhap news agency, citing data from its financial analytics firm.
Additionally, Samsung forecasts a notable increase in sales by 11.4 per cent, totalling 71 trillion won.
In recent years, South Korean chipmakers, spearheaded by Samsung, have experienced record profits driven by soaring prices of their products. However, the industry faced challenges due to a global economic slowdown, which impacted sales of memory chips. Despite this setback, the anticipated surge in operating profits signifies a promising turnaround for Samsung Electronics.
Analysts have revised targets upwards for Samsung, believing it will greatly benefit from the rapid adoption of AI, alongside a broader recovery in demand for memory modules and an increase prices.
This optimism has prompted fund managers to reallocate investments towards Samsung.
While competitors like NVIDIA and SK Hynix have already experienced substantial gains, Samsung is seen as having considerable potential.
A recent endorsement by NVIDIA’s Jensen Huang and reports of a potential HBM supply deal has further fueled analysts’ confidence in Samsung’s prospects.
Analysts, including several from Citigroup Inc., foresee a replacement cycle in which solid-state drives (SSD) could replace hard-disk drives (HDD) in AI applications, providing an additional avenue for Samsung’s growth.
The consensus among analysts suggests a bullish outlook for Samsung, with expected gains outpacing its competitors. Recent earnings reports have exceeded analyst estimates, further bolstering investor confidence.
Despite recent gains, Samsung continues to trail behind other industry leaders on a year-to-date basis. However, investors remain optimistic about Samsung’s resurgence, emphasizing the need for clarity on HBM to solidify its position as an AI stock.
As the semiconductor market continues to evolve, Samsung Electronics stands poised to capitalize on the intersection of AI and memory technology, positioning itself for significant growth in the coming months.
(With inputs from agencies)
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