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Samsung Expects Over 1,400% Profit Surge Amid AI Boom

Author

Alicia Shapiro
July 05, 2024 • Estimated Reading Time: 3 minutes

A futuristic financial news scene showing Samsung Electronics' impressive profit surge. A large graph indicates a sharp increase in profits, with AI chip demand highlighted. The background features Samsung’s logo, AI technology imagery, and trading data. The setting is a modern financial newsroom with digital displays and analysts discussing the news

Samsung Expects Over 1,400% Profit Surge Amid AI Boom

Samsung Electronics anticipates a significant surge in profits for the three months ending June 2024, forecasting a 15-fold increase compared to the same period last year. This remarkable growth is attributed to the booming demand for artificial intelligence (AI) chips, which has driven up the prices of advanced chips and positively impacted the firm’s forecast for the second quarter.

Key Highlights

  • Profit Increase: Samsung expects its profit to rise to 10.4 trillion won ($7.54 billion; £5.9 billion) from 670 billion won last year, surpassing analysts' forecasts of 8.8 trillion won according to LSEG SmartEstimate.

  • Market Impact: Following the announcement, Samsung shares rose by over 2% during early trading hours in Seoul.

  • Industry Position: As the world's largest maker of memory chips, smartphones, and televisions, Samsung benefits significantly from the rising demand for AI technology in data centers and smartphones.

  • Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation, stated, “Right now we are seeing skyrocketing demand for AI chips in data centers and smartphones.”

Broader Market Influence

The AI boom has fueled a broader market rally over the past year, pushing major indices like the S&P 500 and the Nasdaq to new records. The market value of chip-making giant Nvidia surged past $3 trillion last month, briefly becoming 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,” added Einstein.

Upcoming Challenges

Despite the positive forecast, Samsung Electronics faces potential challenges, including a possible three-day strike by a union of workers demanding a more transparent system for bonuses and time off, expected to start on Monday.

Conclusion

Samsung’s anticipated profit surge highlights the significant impact of the AI boom on the technology sector. As the demand for AI chips continues to rise, Samsung remains well-positioned to benefit from this trend, although upcoming labor challenges may present obstacles.