Samsung forecasts record third-quarter profit of roughly $80bn on AI chip demand, but shares slip

Samsung Electronics forecasts third-quarter operating profit of approximately 107.4 trillion won (~$80bn / £61bn), a record, driven by booming demand for memory chips used in AI data centres.

Samsung shares dropped 0.7% on Thursday morning despite the record profit forecast. Investors were unmoved. Revenue is projected at approximately 195 trillion won, up nearly 127% from the same period last year, and the profit figure marks the fourth consecutive quarter of record earnings. Operating profit has crossed 100 trillion won for the first time in the company’s history. The projected operating profit is 782% higher than a year earlier.

“Samsung has delivered a record profit and still fallen short of expectations, which tells you just how demanding the AI trade has become,” said Josh Gilbert, lead analyst for APAC at investment platform eToro.

AI memory boom

Samsung is one of the world’s largest memory chip makers alongside SK Hynix and Micron, producing chips crucial for AI firms like Nvidia. In the second quarter, Samsung posted record revenue of 171.5 trillion won and record operating profit of 89.5 trillion won, driven by its memory business. The momentum has only accelerated since. US tech giants Google, Amazon, and Meta pledged more than $650bn into AI projects this year, feeding a global surge in demand for the advanced memory that powers AI data centres. In June, South Korea unveiled plans for at least $880bn in chip manufacturing projects led by Samsung and SK Hynix to build out the country’s production capabilities in the coming years. Rival Asian firms in Japan, China, and Taiwan are also investing heavily in chip plants as demand for AI soars. A chip shortage from surging demand has led firms including Samsung to raise prices, making products such as smartphones and computers more expensive.

Memory buyers are also committing to multiyear supply agreements, giving Samsung greater visibility over demand in a business where investors have always worried about the next downturn, Gilbert said. Samsung’s stock market valuation crossed $1tn earlier this year as surging semiconductor demand pushed up sales for chipmakers.

Smartphones and partnerships

Samsung makes the Galaxy Fold and S26 smartphones. Its latest folding devices launched in August and are expected to boost earnings. In September, Samsung announced a strategic partnership with French AI startup Mistral AI, with plans to deploy the startup’s AI models across its semiconductor operations. Samsung is expected to release full third-quarter earnings with a breakdown by business division later this month. Major South Korean companies tend to release earnings previews to advise investors ahead of more detailed reports.