Samsung Electronics (OTC:SSNLF) on Tuesday is expected to deliver another record-breaking quarter as surging AI-driven demand for memory chips continues to lift prices, though higher employee bonus costs could weigh on reported earnings.
AI Memory Boom Expected to Drive Another Record Quarter
Samsung is expected to report an operating profit of about 86 trillion won ($56.35 billion) for the April-to-June quarter, according to an LSEG SmartEstimate based on forecasts from 30 analysts, Reuters reported on Sunday.
That would represent an almost 18-fold increase from 4.7 trillion won a year earlier and mark the company’s third consecutive quarter of record operating profit.
The expected earnings surge reflects a prolonged shortage in the global memory market, with demand for AI infrastructure continuing to outpace supply. Analysts believe the market will remain undersupplied through at least next year.
The world’s largest memory chipmaker supplies major technology companies, including Nvidia Corp (NASDAQ:NVDA), Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google and Apple Inc. (NASDAQ:AAPL), all of which continue to expand AI-related investments.
AI Demand Lifts DRAM And NAND Prices
The AI boom is boosting demand not only for high-bandwidth memory used in AI accelerators but also for conventional DRAM and NAND chips as more advanced AI applications require greater memory and storage capacity.
According to Citi Research, average selling prices for DRAM and NAND climbed 44% and 53%, respectively, during the second quarter.
The rally has fueled gains across the memory industry, with Samsung, SK Hynix and Micron Technologies, Inc. (NASDAQ:MU) all seeing their market valuations surpass $1 trillion this year.
Employee Bonuses Could Weigh On Samsung Earnings
Despite the strong operating environment, analysts caution that Samsung’s reported earnings could fall short of expectations if it books a larger-than-expected provision for employee bonuses.
The company reached a wage agreement in May that allocates 10.5% of the semiconductor division’s operating profit to special bonuses.
Some analysts estimate cumulative bonus provisions could exceed 40 trillion won, making the timing of those accounting charges an important factor in quarterly results.
AI Spending Outlook Remains A Key Risk
Looking ahead, analysts say the biggest threat to Samsung’s momentum is any slowdown in AI infrastructure spending.
JPMorgan noted investors remain confident about tight memory supply-demand fundamentals but are increasingly questioning whether AI memory’s growing share of cloud providers’ capital expenditures can be sustained over the long term.
Samsung is scheduled to release its detailed second-quarter earnings later this month.
Price Action: At the time of writing, Samsung shares were trading at 307,000 South Korean won (about $00), down 0.81% on the day in Seoul, according to Benzinga Pro.
According to Benzinga Edge Stock Rankings, Samsung shares show a positive price trend across the short, medium and long-term time frames.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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