Artificial intelligence boosts profits, shares rise | Wilnesh News

South Korean tech giant Samsung Electronics said its shares jumped to their highest level since January 2021 Second-quarter profit expected to be better than expected Thanks to the explosive demand for artificial intelligence.

The stock was up 2.24% on Friday morning, trading as high as 86,500 won ($62.73), according to LSEG data. Samsung shares closed at 84,600 won on Thursday.

Samsung issued guidance on Friday, saying operating profit for the April-June quarter is expected to be about 10.4 trillion won ($7.54 billion), an increase of about 1,452% from 670 billion won a year ago. Operating profit is expected to exceed LSEG’s forecast of 8.51 trillion won.

The company also said it expects second-quarter revenue to increase to 73 trillion won to 75 trillion won from 60.01 trillion won a year ago. This is in line with LSEG analysts’ estimate of 73.7 trillion won.

Business at the world’s largest memory chip maker rebounded last year as memory chip prices recovered on optimism about artificial intelligence. The South Korean electronics giant posted record losses in 2023 as the industry reels from slumping demand for memory chips and electronics following the coronavirus pandemic.

Its memory chips are commonly found in a variety of consumer devices such as smartphones and computers.

Samsung said in April it expected the second quarter to be driven primarily by demand for generative artificial intelligence, while mobile demand remained stable.

The South Korean tech giant is making a big push into generative AI with its Galaxy S24 Ultra smartphone, which has the ability to use AI to edit photos and search for items online.

“Samsung’s earnings announcement was a surprise, but the main earnings growth came from high memory prices. So it’s ironic that Samsung is lagging behind in HBM (high-bandwidth memory) production. So supply (qualification) to Nvidia has been delayed,” executive officer SK Kim Daiwa Capital Markets Director told CNBC’s “Street Signs Asia” program on Friday.

HBM chips are advanced storage chips that are critical to AI chipsets. Due to the booming development of AI, there is a huge demand for AI chipsets. This has largely benefited companies such as Samsung Electronics and SK Hynix, the world’s two largest memory chip manufacturers.

Reuters reported in May that Samsung is not yet eligible for use Nvidia’s AI processor, Nvidia is said to be considering Samsung as a potential supplier of HBM chips. Samsung refuted the reportsaid HBM supply testing with multiple partners is “on track.”

“Despite the delay, the company’s earnings surprise was driven by high memory prices,” Kim said.

“So, even though they’re delayed in HBM (state-of-the-art memory products), they enjoy the benefits of being No. 1 in capacity and market share, so they can leverage that through higher ASP (average selling price) to maximize profits.

Samsung will release detailed second-quarter results later this month.

–CNBC’s Lim Hui Jie contributed to this report.