The earnings report comes after a period of heightened volatility for semiconductor stocks. Although global chip shares posted their strongest quarterly performance on record, trading became more uneven as investors weighed growing competition, concerns about future chip supply, and questions over whether massive AI infrastructure spending will continue delivering returns.
“The earnings land at the exact moment the market is questioning both sides of the memory trade, with Meta’s compute plans raising doubts about demand and Apple’s talks with Chinese suppliers hinting at cracks in the supply squeeze,” said Dave Mazza, chief executive officer of Roundhill Financial. “A print near the consensus settles the argument in Samsung’s favor.”
Demand for high-performance memory used in AI systems has become a major driver of Samsung’s recovery. High-bandwidth memory, which powers AI accelerators used to train and run models such as OpenAI’s ChatGPT and Anthropic’s Claude, has contributed to higher memory prices and stronger margins for manufacturers including Samsung and SK Hynix. According to HSBC Holdings Plc, average DRAM selling prices rose more than 40% during the April-to-June quarter compared with the previous three months, while NAND prices increased more than 50%.
Samsung and SK Group have announced plans to build two semiconductor manufacturing plants each in South Korea’s southwest, representing a combined investment of 800 trillion won to expand production capacity. Separately, The Information reported that Anthropic is in discussions with Samsung over a potential manufacturing partnership for a custom AI chip.
Market participants are also looking to Samsung’s results for additional insight into demand for high-bandwidth memory and pricing trends. Jung In Yun, chief executive officer at Fibonacci Asset Management Global, described the preliminary earnings as a “key catalyst” for global semiconductor stocks.
Samsung’s stock doubled during the last quarter and has gained more than 155% this year. However, the shares fell nearly 9% over the five trading sessions through Friday as semiconductor stocks experienced renewed volatility despite strong results from Micron Technology.
Some investors remain cautious that memory pricing could eventually moderate as additional production capacity comes online. “Memory stocks have traditionally peaked a few months before memory prices hit their cyclical top,” said Jian Shi Cortesi, a fund manager at Gam Investment Management. “A flattening or deceleration in the rate of memory price hikes could signal downside risks for memory names.”
Even so, analysts continue to see further upside for Samsung. Bloomberg data shows the average broker price target implies an additional 52% gain over the next 12 months. Citigroup recently raised its target price to 530,000 won from 460,000 won, citing continued strength in memory demand.
“While there has been market concern about excess AI computing capacity sparked by Meta, we view the recent share price pullback as a technical correction,” Citigroup analysts led by Peter Lee wrote in a July 2 note. “We believe memory fundamentals are intact and server DRAM pricing has been outperforming on strong CPU demand.”
This analysis is based on reporting from Yahoo Finance.
Image courtesy of hatchwise.
This article was generated with AI assistance and reviewed for accuracy and quality.
