Samsung Electronics announced a record first-quarter operating profit of 57 trillion won. In just one quarter, it earned profit approaching the 2018 annual operating profit (58.9 trillion won), when the past semiconductor "super cycle" occurred.
In the securities industry, analysts say Samsung Electronics is still at the early stage of an earnings upcycle as memory prices continue to rise amid expanded investment in artificial intelligence (AI) data centers. Accordingly, there are also projections that the share price could climb to as high as 360,000 won.
Samsung Electronics said in its preliminary first-quarter results that it posted sales of 133 trillion won and operating profit of 57.2 trillion won. That represents a 68.06% rise in sales and a 755.01% increase in operating profit from a year earlier. It is the first time a domestic company has recorded more than 50 trillion won in operating profit in a single quarter.
In the securities industry, target prices are being sharply raised around Samsung Electronics' earnings release. KB Securities lifted its target price for Samsung Electronics to 360,000 won from 320,000 won, while Korea Investment & Securities Co. raised it to 330,000 won from 270,000 won. iM Securities also newly set a 280,000 won target price. In stark contrast to today's record results, early last year the securities industry was gripped by deep pessimism about Samsung Electronics to the point of worrying about a stock price in the 30,000-won range.
The key basis for the target price hikes is improved earnings driven by higher memory semiconductor prices. KB Securities estimated the operating profit of Samsung Electronics' memory division at about 316 trillion won and projected this year's overall operating profit would reach 327 trillion won, roughly eight times last year's. Korea Investment & Securities Co. also forecast this year's operating profit at about 302 trillion won.
Memory prices are also rising steeply. KB Securities projected Samsung Electronics' DRAM prices would climb 250% from a year earlier and NAND prices 187%. Kim Dong-Won, head of research at KB Securities, said, "First-quarter memory prices exceeded expectations, and the upward trend will continue into the second quarter and strengthen further toward the second half."
Macquarie Securities also said, "Prices of commodity DRAM and NAND are expected to double in the first quarter of this year," projecting that the momentum for rising memory semiconductor prices will persist throughout the year. In February, Macquarie set a target price of 340,000 won for Samsung Electronics.
In the securities industry, many see a high likelihood that this earnings growth will continue in the mid to long term, in step with expanded investment in AI data centers. Researcher Kim noted, "The trend of increasing memory content essential for inference AI is expected to continue for the next few years," adding, "Annual AI infrastructure investment exceeding 1,000 trillion won is also structurally driving memory demand."
In particular, the fact that Samsung Electronics is pursuing long-term supply contracts with global hyperscalers is cited as a factor boosting earnings stability. Chae Min-Suk, a researcher at Korea Investment & Securities Co., said, "Samsung Electronics is set to sign long-term supply contracts with major hyperscaler clients," adding, "Strong results such as now could continue in the mid to long term."
Kim Young-Gun, a researcher at Mirae Asset Securities, also said, "Long-term supply contracts of more than three years are being signed between memory manufacturers, including Samsung Electronics, and big tech," adding, "Big tech clients are prioritizing securing volumes over price negotiations when signing contracts."
In the market, some assess that the current memory boom has a structural character different from the past semiconductor super cycles. In the past, temporary increases in DRAM demand at big tech companies determined earnings, whereas now, amid structurally rising demand from the spread of the AI industry and continued supply shortages, memory companies' pricing power has strengthened significantly.
Previously, Samsung Electronics entered a semiconductor super cycle in 2018 as DRAM demand increased due to a data center expansion race among big tech companies such as Google. At the time, Samsung Electronics' operating profit on a consolidation basis recorded about 58.9 trillion won, but the following year, as memory semiconductor demand fell, Samsung Electronics' results deteriorated sharply.