Samsung Forecasts 19-Fold Profit Surge Amid $100 Billion Market Value Drop

Samsung Electronics reported a dramatic forecast on Tuesday, expecting its operating profit for the second quarter to soar 19 times compared to the same period last year. The company projects an operating profit of approximately $58.44 billion for April to June, surpassing earlier estimates of $57 billion. This profit alone exceeds the total combined profits Samsung earned over the past three years. Revenue is also expected to jump 129% to $112 billion compared to last year.

This surge is driven by the ongoing global expansion of artificial intelligence data centers, which has fueled massive demand for memory chips and pushed their prices to record highs. Samsung, the world’s largest memory chip manufacturer, has benefited significantly from this trend. However, despite these impressive financial results, Samsung’s stock plunged by up to 10.1%, and competitor SK Hynix’s shares fell by up to 10.6%, dragging South Korea’s Kospi index down by 10.9%.

Market analysts attribute the stock decline to overly high expectations and growing concerns about a potential slowdown in AI data center investments. Additional worries include the possibility that major tech companies may need to take on heavy loans to finance AI infrastructure, with uncertain returns potentially dampening chip demand. Samsung also allocated substantial funds for bonuses to its semiconductor division employees, linked to operating profit, which makes the profit growth even more notable.

Looking ahead, economists warn that a reduction in AI infrastructure investments poses the biggest risk to continued growth in the memory chip market. The rapid increase in advanced HBM chip production has also reduced the supply of regular memory products used in smartphones, PCs, and servers, supporting higher prices. Nonetheless, investor caution remains high amid uncertainty about the sustainability of the current chip market rally.