Samsung Electronics anticipates a remarkable 1,400% surge in profits for the second quarter of 2024, compared to the same period last year. This 15-fold increase is driven by the soaring demand and rising prices for advanced chips, fueled by an artificial intelligence (AI) boom.
The South Korean tech giant, the world’s largest manufacturer of memory chips, smartphones, and televisions, saw its shares rise by more than 2% during early trading in Seoul following the announcement.
For the quarter ending in June, Samsung expects its profits to reach 10.4 trillion won ($7.54 billion; £5.9 billion), significantly higher than the 670 billion won recorded last year. This forecast surpasses analysts’ expectations of 8.8 trillion won, according to LSEG SmartEstimate.
“Right now, we are seeing skyrocketing demand for AI chips in data centers and smartphones,” said Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation.
The AI boom has not only boosted Samsung’s earnings but also contributed to the broader market rally. Last month, Nvidia’s market value briefly exceeded $3 trillion, making it 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,” Einstein added.
Samsung Electronics is the flagship unit of the South Korean conglomerate Samsung Group. Despite the positive financial outlook, the company faces potential challenges next week with a possible three-day strike starting on Monday. Workers are demanding a more transparent system for bonuses and time off.
In the first quarter of this year, Samsung reported a more than 10-fold increase in profits, highlighting the ongoing positive impact of the AI-driven demand on the tech industry.
