Samsung Electronics Surges on AI-driven Profit Expectations

Samsung Electronics Surges on AI-driven Profit Expectations | Enterprise Wired

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Source – ET Telecom

Shares of Samsung Electronics soared to their highest levels since January 2021 following the announcement of better-than-expected profit projections for the second quarter, fueled by robust demand for artificial intelligence technologies.

Strong Financial Projections and Market Response

On Friday morning, Samsung’s stock rose by up to 2.24%, reaching 86,500 Korean won ($62.73), according to LSEG data. This surge came after Samsung’s guidance indicated an operating profit forecast of approximately 10.4 trillion won ($7.54 billion) for the April to June period, marking a staggering 1,452% increase from 670 billion won reported a year earlier. The projected profit exceeded analysts’ expectations, surpassing LSEG’s estimate of 8.51 trillion won.

Revenue Expectations and Industry Recovery

Samsung Electronics also forecasted second-quarter revenue to range between 73 trillion to 75 trillion won, compared to 60.01 trillion won reported in the same quarter last year. This outlook aligns closely with the 73.7 trillion won estimated by analysts at LSEG. The surge in profit and revenue reflects a strong recovery for the world’s largest memory chip maker, buoyed by revived demand and higher prices driven by optimism in the AI sector.

Samsung Stock Leaps to 3-year High After Profit Surges 15-fold

Impact of Generative AI and Market Strategy

The recovery in Samsung’s business follows significant setbacks in 2023, when the company faced substantial losses due to a downturn in global demand for memory chips and electronic devices post-Covid. Samsung has strategically pivoted towards leveraging generative AI, with recent products like the Galaxy S24 Ultra integrating advanced AI capabilities for photo editing and online search functionalities.

Challenges and Future Outlook

Despite the positive earnings outlook, challenges remain for Samsung, particularly concerning its production delays in High-Bandwidth Memory (HBM) chips, crucial for AI chipsets. These delays have impacted supply agreements with major clients like Nvidia. However, Samsung remains optimistic about its ongoing efforts to qualify HBM chips for use in AI processors, emphasizing that testing with partners is progressing as planned.

Samsung Electronics is scheduled to release detailed second-quarter financial results later this month, providing further insights into its operational performance and strategic initiatives amidst a competitive global tech landscape.

By capitalizing on AI-driven demand and navigating through industry challenges, Samsung aims to sustain its momentum and strengthen its position as a leader in the semiconductor and consumer electronics markets.

Also Read:

Samsung Electronics Projects 35% Drop in Q4 Operating Profit

Samsung Faces Fourth Consecutive Quarterly Profit Decline Amid Chip Challenges

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