Samsung expects profit growth of over 1400% due to AI boom

Samsung Electronics predicts its profit for the three months to June 2024 will rise 15 times year-on-year. The artificial intelligence (AI) boom has boosted prices for advanced chips, leading to an improvement in the company’s second-quarter outlook.

An artificial intelligence (AI) boom has boosted prices for advanced chips, leading to an improvement in the company’s second-quarter forecast.

The South Korean tech giant, which is the world’s largest maker of memory chips, smartphones and televisions, announced that first-quarter profit growth exceeded a 10-fold increase. The company expects second-quarter profit to be 10.4 trillion won ($7.54 billion; £5.9 billion), up from 670 billion won a year earlier, beating analysts’ forecasts of 8.8 trillion won, according to LSEG’s SmartEstimate.

By the news, Samsung shares were up more than 2% in morning trading hours in Seoul.

«We are now seeing a rapid increase in demand for AI chips in data centers and smartphones»” said Mark Einstein, principal analyst at ITR Corporation, a Tokyo-based research and consulting firm. Optimism around AI has been one reason for the broad market rally over the past year, leading to new records for the S&P 500 and Nasdaq in the U.S. on Wednesday.

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The market value of chip giant Nvidia surpassed $3 trillion last month, temporarily taking the top spot among the world’s most valuable companies. «The AI boom, which has significantly boosted Nvidia’s earnings, is also boosting the profits of Samsung and the sector as a whole», Einstein added.

Samsung Electronics is the flagship unit of South Korean conglomerate Samsung Group. The company could face a three-day strike next week, expected to begin Monday. The workers’ union is demanding a more transparent bonus and vacation time system.

Samsung Electronics is also demanding a more transparent bonus and vacation time system.