Samsung profits jump 1,800% as AI chip demand lifts Q2 forecast

Samsung flags 19-fold jump in Q2 profit on AI memory boom

Samsung Electronics on Tuesday estimated a 19-fold jump in second-quarter operating profit, driven by sustained demand and elevated prices for the memory chips that have become central to building artificial-intelligence data centres. The guidance confirmed that the AI infrastructure build-out is now delivering historic cash flows to the world’s largest memory chipmaker — even though the headline number failed to satisfy investors who had already pushed Samsung’s share price sharply higher this year.

The Seoul-based company said in its earnings guidance that it expected operating profit of 89.4 trillion won (about £43.6 billion or US$58.4 billion) for the April-to-June period, against just 4.7 trillion won a year earlier. On a year-on-year basis that represents a roughly 1,800% increase, the BBC reported. Revenue for the quarter was guided at around 171 trillion won, more than double the 75.7 trillion won posted in the same period of 2025 and up from 133.9 trillion won in the first quarter of 2026, according to CNBC and the Straits Times/Reuters. Samsung’s full, divisional results are due on July 30.

Samsung’s preliminary forecasts typically do not include commentary, but the company noted in its Q1 release that its memory business had set all-time revenue and profit records, attributing the result to “technological leadership in the memory market, as well as higher average selling price,” The Register reported. Both factors remain in place, the report said, because the AI boom continues to draw memory supply into data-centre products.

Why it matters

The numbers mark Samsung’s third consecutive record quarter of operating profit and provide hard evidence that the long-running squeeze in DRAM and NAND memory is generating windfall revenue for the few companies capable of supplying high-bandwidth memory (HBM) and conventional memory at scale. IDC tech devices researcher Bryan Ma told the BBC that memory-industry conditions are “different from anything the memory industry has navigated,” with supply for everyday electronics being squeezed as capacity is prioritised for AI infrastructure. IDC expects tightness to persist through next year.

The macro stakes extend beyond Samsung. The Straits Times/Reuters and CNBC reported that combined capital-expenditure pledges by Samsung and rival SK Hynix for new fabrication capacity in South Korea have run into hundreds of billions of dollars. In June, South Korea unveiled plans for at least US$880 billion of investments led by Samsung and SK Hynix, the BBC said, while rival Asian chipmakers in Japan, China and Taiwan are also investing heavily in new fabs to meet demand. The earnings of both Korean giants have lifted the KOSPI benchmark by more than 80% year-to-date, with Samsung’s market value more than doubling and SK Hynix’s jumping more than 200%, according to the BBC.

Where the reporting diverges

Despite the record profit, all three English-language outlets that covered the Tuesday release reported a sharp share-price reaction in Seoul. Samsung closed down about 6.9%, having briefly dropped as much as 10.1%, while SK Hynix fell 6.1% and the KOSPI slid 4.9%, the Straits Times/Reuters said. CNBC cited two explanations that differ in emphasis. Market analyst Zavier Wong of eToro pointed to expectations: “The stock had priced in a historic quarter for months … confirmation is what people sell into,” he was quoted as saying, attributing the move to concerns that “AI infrastructure spending can’t keep growing at the pace that has been driving memory prices.” Counterpoint Research director Tom Kang separately flagged the location of Samsung’s new fab plan in the south of the country — away from Korea’s traditional chip-making heartland — as unsettling investors, while also pointing to a heavy bonus provision Samsung booked after agreeing to scrap its 1,000% base-salary bonus cap and earmark 10.5% of operating profit for workers.

The Straits Times/Reuters story introduced a third strand: Morningstar analyst Jing Jie Yu said Samsung’s revenue guidance was “not as strong as expected,” suggesting that DRAM price hikes may be slowing, which “spooked investors who are increasingly pricing in structural strength in memory prices.” The BBC and CNBC both reported the roughly 7% share-price decline. Citi Research, cited by the Straits Times/Reuters, put average selling prices for DRAM and NAND up 44% and 53% quarter-on-quarter respectively in Q2 — confirming Samsung’s positive top-line backdrop even as some analysts flagged a modest deceleration.

Comparisons and scale

The 89.4 trillion won operating profit guidance exceeds Samsung’s combined earnings over the past three years, the Straits Times/Reuters reported. Without the one-off bonus provisions tied to the May labour agreement, analysts estimated operating profit would have cleared 100 trillion won. Samsung’s Q2 2026 revenue of 171 trillion won is more than double the 75.7 trillion won booked in Q2 2025, while the prior-quarter figure of 133.9 trillion won set a high bar that Samsung comfortably cleared, according to CNBC. The Register put Samsung’s year-ago quarterly sales at US$49.7 billion and operating profit at US$3.1 billion, against the current US$58.4 billion operating-profit estimate — a year-on-year jump in operating profit of roughly $55 billion in dollar terms.

The scale of the AI capex backdrop is comparable. Nvidia, the dominant supplier of AI accelerators, posted record sales and profits for the January-to-March quarter with revenue above US$80 billion in May, but its stock fell at the time as investors debated competition, the BBC noted. Citi’s 44% quarter-on-quarter DRAM price rise reported by the Straits Times/Reuters is several times the typical industry price cycle and is consistent with IDC’s view that conditions are unusual. SK Hynix is set to start trading as an ADR on July 10 following a 43 trillion won share sale launched on July 5, the Straits Times/Reuters added, making the upcoming days a fresh test of investor appetite for Korean memory exposure.

Different angles and stakeholders

For Samsung shareholders, the run-up in the share price has already delivered the bulk of the upside; the question now is the sustainability of multiples. For Samsung’s labour force, the May wage deal ties a meaningful slice of operating profit to bonuses, meaning a slice of the AI windfall is being redistributed to chip-making workers rather than retained as earnings — a factor that, according to Counterpoint’s Kang, has weighed on the stock. For the South Korean government, which backs the US$880 billion investment plan unveiled in June, the cycle ties national industrial policy to the cycle of US hyperscaler capex. Morgan Stanley, cited by the Straits Times/Reuters, warned on July 6 that semiconductor stocks are likely to stay weak as investors brace for “more capex discipline in the near-term” from hyperscalers such as Meta, Microsoft, Amazon and Alphabet — companies that themselves may need to take on significant debt to fund AI infrastructure.

Foundry and logic-chip (LSI) divisions at Samsung are set to weigh on the next print. The Straits Times/Reuters noted that losses in Samsung’s foundry and LSI businesses are likely to widen because bonus expenses are allocated across the semiconductor division, even as the memory business is expected to post another strong quarter. Counterpoint’s Kang said monthly checks on memory prices for consumer, mobile and server products still point to further increases “through at least this quarter,” which would support Q3 earnings — even if the pace of price hikes has begun to moderate.

What to watch next

Three dates matter most in the near term. Samsung will publish its detailed Q2 results on July 30, including the divisional split between memory and foundry that investors and analysts have already flagged as the swing factor. SK Hynix’s first ADR session on July 10 will provide a real-time read on demand for Korean memory exposure from US investors. Beyond Korea, any revised capex commentary from US hyperscalers — and any signal that the major US technology companies will need to borrow heavily to maintain AI infrastructure spending — will directly affect DRAM and NAND pricing, Citi’s data show. JPMorgan Asset Management global market strategist Raisah Rasid told the Straits Times/Reuters that she is “confident the earnings are going to come through” but expects “a moderation” in returns after the triple-digit gains of the first half. Until that moderation is visible in capex plans, the central debate — whether record memory profits are a multi-year structural shift or the peak of a cyclical bubble — will continue to drive Samsung’s share price more than any single quarterly number.