Samsung Electronics Co.’s earnings will test whether it can convince investors of its long-term outlook, an increasingly critical task as record profits have failed to reinvigorate the stock. The South Korean tech giant is expected to report its largest-ever quarterly profit on Thursday, but blowout numbers alone may not be enough to reassure investors that memory-chip demand is durable and high product prices can be locked in through long-term contracts. Samsung and fellow memory-chip leaders SK Hynix Inc. and Micron Technology Inc. ranked among the hottest AI trades earlier in the year.
Yet, they lagged behind the broader US tech rebound in the third quarter, even with more favorable valuations. Citing currency headwinds, Morgan Stanley and Citigroup have recently revised down their earnings estimates for Samsung. Still, the world’s largest memory chipmaker is projected to report preliminary operating profit of 108.5 trillion won ($80.8 billion) for the quarter ended September on Thursday, according to analysts’ estimates compiled by Bloomberg.
That would mark a nearly ninefold increase from a year ago. Revenue is forecast to surge about 134% to a record 201.3 trillion won. Its chip division is expected to post operating profit of 110 trillion won, offsetting losses at its electronics unit.
Samsung is set to release a full financial statement around the end of the month. Investor skepticism over the memory industry’s notoriously boom-and-bust cycle and profit durability resurfaced following Micron’s latest earnings. Despite management’s bullish outlook that supply conditions will remain tight for next year, the stock has been little changed since last week’s report.
Getting the market to come around on that view is especially urgent as Samsung prepares to wrap up its 15 trillion won stock buyback for employee compensation that had provided steady demand for the shares since late August. While it has lagged chief rival SK Hynix for years in high-bandwidth memory chips, Samsung’s push to capture market share and boost long-term competitiveness through next-generation HBM4e chips is beginning to turn heads. The expectations that Samsung will be expanding its HBM4e market share is gaining more traction.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing