Samsung Electronics' stock price rose more than 19% in July alone, marking the highest monthly increase in about five years. While Samsung Electronics has struggled due to competition in the artificial intelligence (AI) chip core component market and poor performance in the foundry business, foreign investors expecting a rebound have stepped in as buyers, pushing the stock price up.
According to the Korea Exchange on the 1st, Samsung Electronics' stock was traded at 71,400 won the previous day. The stock price increased 19.4% (11,600 won) from 59,800 won at the end of June. July's monthly stock price increase for Samsung Electronics is the highest since December 2020. Previously, the stock price had jumped from 66,700 won to 81,000 won, an increase of 21.4% (14,300 won), due to the impact of the COVID-19 pandemic.
Looking back over the last 20 years, Samsung Electronics' stock price increase rate in July is the seventh highest. The highest monthly stock price increase during this period was in July 2009, when the stock surged by 22.3%. In October 2015, Samsung Electronics also saw its monthly stock price rise exceed 20%, but it was shaken by concerns over economic conditions in China and Europe before rebounding.
In comparison to the past, Samsung Electronics' stock performance this year is different. Previously, when Samsung Electronics' stock rose around 20% monthly, it was in the context of significant external shocks such as the dot-com bubble burst, the global financial crisis, and the COVID-19 pandemic. This time, the primary cause of the crisis is the company's internal capabilities issues, falling behind in key market competitions including HBM.
In the second quarter (April to June) of this year, Samsung Electronics recorded an operating profit of 4.6761 trillion won, a decrease of 55.23% compared to the same period last year. The operating profit of the DS institutional sector, which is responsible for the semiconductor business, was 400 billion won, the lowest since the fourth quarter of 2023.
In this situation, it was foreign investors who pushed up Samsung Electronics' stock price. Since June, foreigners have shown a preference for buying Samsung Electronics stocks on a monthly basis. In particular, they have net purchased 3.485 trillion won worth just this month.
Three main reasons are cited for the foreign purchase trend. First, U.S. Nvidia has had the path opened to export low-end AI chips back to China. The H20 will be equipped with the fourth generation HBM (HBM3), not the latest fifth generation HBM (HBM3E). Samsung Electronics has been supplying HBM3 for H20 to Nvidia.
It was also a positive factor that Samsung Electronics' foundry business, which has been posting trillion won losses each quarter, secured a major client in Tesla. Samsung Electronics signed a foundry supply contract worth 22.7647 trillion won with Tesla. The contract period extends until the end of December 2033. Elon Musk, CEO of Tesla, projected that the contract size would increase further.
Samsung Electronics has also begun a third round of buybacks and retirements of its own shares worth 10 trillion won. The company plans to acquire a total of 3.5010 trillion won worth (5,668,092 shares) of common stock by October 8. Regular buybacks of its own stocks help support the stock price.
As Samsung Electronics' stock price rebounds, individual investors are also entering the profit evaluation stage in succession. The average purchase price for 697,539 clients of NH Investment & Securities who hold Samsung Electronics stocks was 69,514 won as of the 29th, with an evaluation profit rate of 3.2% based on the closing price that day. The revenue investor ratio (54.05%) exceeded the loss investor ratio (45.95%).
The key question is whether Samsung Electronics' stock price can continue its upward trajectory. Over the past 20 years, Samsung Electronics has recorded a monthly stock price increase of over 10% on 26 occasions, and among those, 17 times (65.4%) the stock price continued to rise the following month.
Securities firms expect that in the short term, the contents of the U.S. semiconductor product tariffs and whether Samsung Electronics' HBM3E 12-layer product will succeed in delivery to Nvidia will dictate stock price movements.
The average target stock price for Samsung Electronics, as suggested by 35 institutions worldwide, is 71,800 won, indicating room for price appreciation compared to the current stock price. The average target stock price by domestic securities firms is 77,400 won, which is more favorable. In contrast, JP Morgan and Morgan Stanley offered relatively conservative forecasts in the low 70,000 won range.