Samsung Electronics delivers its strongest quarterly report ever; can HBM4e restart AI memory trading?
Samsung Electronics is about to face a critical test. The company will release its preliminary results on Thursday, and it is expected to record its largest-ever quarterly operating profit. However, the real test is not the scale of profits, but whether it can convince investors that the demand for memory chips is sustainable and that high product prices can be secured through long-term contracts.
The Zhihu Finance APP reports that Samsung Electronics is about to face a critical test. The company will release its preliminary results on Thursday and is expected to report its largest-ever quarterly operating profit. However, the true challenge is not the scale of profit, but whether it can convince investors that demand for memory chips is sustainable and high product prices can be secured through long-term contracts. After record-breaking profits failed to revive the share price, this task has become even more crucial.
According to analysts’ estimates, for the quarter ending September, Samsung Electronics’ preliminary operating profit is expected to reach 108.5 trillion won (about $80.8 billion), a nearly ninefold year-on-year increase. Revenue is projected to grow approximately 134% to a record 201.3 trillion won. The chip division is expected to achieve 110 trillion won in operating profit, offsetting losses from the electronics division. The full financial report is expected to be released at the end of the month.
However, the impressive figures may not be enough to reassure the market. Samsung’s share price remains about 25% below the June peak, even though the company reported record results in July. Samsung, SK Hynix (SKHY.US), and Micron (MU.US) were once popular targets for AI-related trades, but in the third quarter, they lagged behind the overall rebound of U.S. tech stocks, despite being more attractively valued.
Rob Li, Managing Partner of Amont Partners, said: “The key issue is not about the scale of profits but about their sustainability.” He noted that the market is now less interested in quarterly figures and more focused on prospects for 2027 and 2028. Sanjeev Rana, an analyst at CLSA Securities Korea, also pointed out that investors acknowledge the current demand and strong pricing but, given the historical volatility of returns in the memory industry, still question how long this situation can last. Although suppliers claim that long-term agreements and preset pricing frameworks can protect profits, investors remain skeptical.
The latest earnings report from Micron has intensified these concerns. While management remains optimistic that supply will remain tight next year, Micron’s share price has scarcely moved since last week’s report. Li remarked, “Clearly, the market isn’t buying it.” As a result, attention will be on whether Samsung’s management will address the outlook for 2027 and 2028.
Furthermore, Samsung’s 15 trillion won share buyback for employee compensation is about to conclude. This buyback has provided steady demand for the stock since the end of August, and its end will increase market pressure. At the industry level, there is a growing consensus that the peak in memory price growth will slow the overall earnings trajectory. Société Générale forecasts that after earnings growth exceeds 300% in 2026, growth will drop sharply to 36% in 2027, and only 6% in 2028. Morgan Stanley and Citi have also recently cut their profit forecasts for Samsung, citing currency headwinds.
In terms of potential catalysts, Samsung is trying to enhance its long-term competitiveness through its next-generation HBM4e chips. Although it has lagged SK Hynix for years in the high-bandwidth memory sector, expectations that Samsung will expand its HBM4e market share are gaining traction. Kim Minji, investment manager at Must Asset Management, commented that Samsung does have some advantages. The share price has already rebounded about 30% from its July low, in part due to the buyback. Jung In Yun, CEO of Fibonacci Asset Management Global, stated that expectations have become lower, leaving room for positive surprises, but a sustained share price recovery still requires investors to be convinced that earnings momentum will continue into next year.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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