Global investment bank Goldman Sachs raised the target price for Samsung Electronics to 490,000 won and newly added it to its Asia-Pacific regional most-preferred list. It said that although the share price has recently corrected sharply, there has been no change in the outlook for memory demand from expanded artificial intelligence (AI) investment and the growth trajectory of the high-bandwidth memory (HBM) business.
On the 3rd, according to the financial investment industry, Goldman Sachs raised Samsung Electronics' 12-month target price from 480,000 won to 490,000 won and maintained its "buy" rating. It estimated upside potential to the target price at 87% and total return potential including dividends at 91%.
At the same time, it newly added Samsung Electronics to the August "Asia-Pacific (APAC) conviction list." The APAC conviction list is a recommended roster that includes stocks listed in Asia-Pacific markets such as Korea, China, Japan, Hong Kong, India, and Australia that Goldman Sachs views as highly attractive investments.
Goldman Sachs said that although Samsung Electronics' share price fell about 40% over the past month, there were no meaningful changes in core fundamentals. Samsung Electronics posted second-quarter revenue of 171.5 trillion won and operating profit of 89.5 trillion won, in line with the previously released preliminary figures.
It assessed that profitability in the memory business improved even after recognizing a provision related to special bonuses. Goldman Sachs estimated Samsung Electronics' DRAM operating margin approached 80%, with NAND flash operating margin exceeding 60%.
It also projected that memory demand centered on AI servers will continue to far outpace supply. Samsung Electronics' share of server revenue in the second quarter reached an all-time high, and server DRAM was estimated to account for nearly half of total DRAM shipments.
Given the difficulty of ramping up memory production capacity in a short period, it forecast that the supply shortage will worsen next year and is likely to continue through 2028. That suggests current memory prices and profitability may not be merely a short-term peak.
It also cited the expansion of long-term agreements (LTA) as a factor enhancing earnings stability. Samsung Electronics has signed contracts with five top global data center customers and is said to be in final talks with five large AI-related customers. Once additional deals are finalized, multi-year contract volumes are expected to reach 60% to 70% of total planned production capacity.
It also forecast rapid growth in the HBM business. Goldman Sachs estimated that Samsung Electronics' second-quarter HBM revenue rose more than 80% from the previous quarter on increased shipments of HBM3E and HBM4. It projected full-year HBM revenue to more than triple from last year.
Samsung Electronics expects third-quarter HBM4 revenue to more than triple from the previous quarter, with HBM4 accounting for over 60% of total HBM revenue in the second half. Goldman Sachs said Samsung Electronics will strengthen its competitiveness in the AI memory market with HBM4 at the forefront.
It also viewed positively that the valuation overhang eased significantly after the share-price correction. Based on projected 2027 results, Samsung Electronics is trading at a price-earnings ratio (PER) of 3.1 and a price-to-book ratio (PBR) of 1.2. Goldman Sachs said the current share price reflects a valuation close to a memory downcycle, but it expects earnings and return on equity (ROE) to remain solid.
Goldman Sachs raised its shipment outlook for commodity DRAM, HBM, and NAND and its DRAM profitability estimates, nudging up Samsung Electronics' 2026–2028 earnings per share (EPS) forecasts by about 2%. For Samsung Electronics(1P), it also maintained a "buy" rating and a target price of 360,000 won.
With this reshuffle, the Korean stocks on the APAC conviction list increased to four: Samsung Electronics, KB Financial Group, Hyundai Mobis, and S-Oil. Goldman Sachs raised S-Oil's target price from 147,000 won to 156,000 won, while keeping Hyundai Mobis and KB Financial Group at 710,000 won and 214,000 won, respectively.