Samsung Electronics anticipates a 15-fold increase in profits for the three months ending June 2024 compared to the same period last year. The surge is attributed to a booming demand for artificial intelligence (AI), which has driven up prices for advanced chips.
As the world’s largest producer of memory chips, smartphones, and televisions, Samsung’s optimistic forecast for the second quarter has already boosted its shares by over 2% in early trading hours in Seoul.
The company also reported a more than tenfold rise in profits for the first quarter of this year. For the current quarter, Samsung projects its profit to reach $7.54 billion (approximately Sh959 billion), surpassing analysts’ expectations as per LSEG SmartEstimate.
Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation, highlighted the soaring demand for AI chips in data centers and smartphones as a key driver of Samsung’s robust performance.
AI and Optimism
One of the reasons behind the recent broad market rally has been optimism surrounding artificial intelligence (AI), propelling the S&P 500 and the Nasdaq to new record highs in the United States last Wednesday. Nvidia, a leading chip-making giant, saw its market value surpass $3 trillion (approximately Sh423 trillion) last month, briefly claiming the title of the world’s most valuable company.
“The AI boom which massively boosted Nvidia is also boosting Samsung’s earnings and indeed those of the entire sector,” Mr Einstein added.
Samsung Electronics is the flagship unit of South Korean conglomerate Samsung Group.
