Samsung Expects Profit Surge by Over 1,400% Amid AI Boom
Samsung Electronics has announced an anticipated 15-fold increase in profits for the second quarter of 2024 compared to the same period last year, driven by a surge in demand for advanced chips fueled by the artificial intelligence (AI) boom.
The South Korean tech giant, the world’s leading producer of memory chips, smartphones, and televisions, forecasts its profits for the quarter to reach 10.4 trillion won ($7.54 billion; £5.9 billion), a significant rise from 670 billion won the previous year. This projection exceeds analysts’ estimates of 8.8 trillion won, according to LSEG SmartEstimate.
This announcement led to a more than 2% rise in Samsung shares during early trading hours in Seoul. The company had already reported a more than tenfold increase in profits for the first quarter of this year.
Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation, commented on the trend, stating, “We are currently witnessing skyrocketing demand for AI chips in data centres and smartphones.”
The AI boom has contributed to a broader market rally over the past year, propelling the S&P 500 and the Nasdaq to new records. Notably, the market value of chip-making giant Nvidia surged past $3 trillion last month, briefly making it the world’s most valuable company.
“The AI boom, which significantly boosted Nvidia, is also enhancing Samsung’s earnings and those of the entire sector,” Einstein added.
As the flagship unit of the South Korean conglomerate Samsung Group, Samsung Electronics is facing a potential three-day strike starting next week. A union of workers is demanding a more transparent system for bonuses and time off.
With AI technology driving growth across the tech industry, Samsung’s impressive profit forecasts underscore the pivotal role of advanced chips in shaping the future of digital innovation.
