Samsung shares hit three-year high as AI wave sends profits soaring

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Top Line

Samsung shares hit a three-year high on Friday after the South Korean tech giant forecast a 15-fold increase in second-quarter operating profit from a year earlier as a global artificial intelligence boom boosted demand for advanced computer chips.

Key Facts

Shares in Samsung Electronics, the flagship of South Korea's Samsung Group, rose 3 percent on Friday to close at 87,100 South Korean won (about $63) per share.

This is the highest price for Samsung Electronics' shares since early January 2021 and was reached after the company announced its profit outlook for the second quarter of this year.

Samsung said it expects to make profits of about 10.4 trillion South Korean won ($7.5 billion) in the second quarter of 2024.

The figure was up from 670 billion won (about $500 million) in the same period last year and well above analysts' expectations, a 15-fold increase from the same period last year, as well as a big increase over first-quarter profits of 6.61 trillion won ($4.8 billion).

Samsung said it expects second-quarter sales to reach 60 trillion won ($43.5 billion) this year, up nearly a quarter from the same period last year.

Points to note

Samsung hasn't released much information about its expected second-quarter sales, but the impressive forecast is likely due to the strong performance of its semiconductor division. Samsung is one of the world's largest computer chip makers, and a surge in demand for artificial intelligence has seen chip prices soar, especially for high-end chips that can be used in AI products and to power data centers. Samsung itself attributes this year's growth outlook to widespread optimism about AI, particularly interest in generative artificial intelligence, the AI ​​that powers tools such as ChatGPT, Gemini, Claude, and Copilot. The AI ​​boom has not only helped Samsung recover from a harsh downturn caused by the COVID-19 pandemic, but it has also propelled other chip and AI companies to incredible heights. Notable among them is Nvidia, the US chipmaker that has quickly grown from a relatively niche maker of hardware used mainly by gamers to one of the world's most valuable companies, with a market capitalization of more than $3 trillion. Nvidia was once the world's most valuable publicly traded company by market capitalization, but is now the third most valuable after Microsoft and Apple.

Points to note

Samsung is due to release a more detailed second-quarter earnings report at the end of July.

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