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Exploring Samsung’s Stock Performance Amid HBM Challenges and AI Opportunities Exploring Samsung’s Stock Performance Amid HBM Challenges and AI Opportunities

Samsung Electronics Co SSNLF is projected to witness a significant rise in its first-quarter operating profit, but its stock has underperformed due to HBM.

Shining Through Adversity: The South Korean tech giant’s first-quarter operating profit is expected to reach 6.6 trillion won ($4.9 billion), marking a tenfold increase from the same period last year. This surge indicates a recovery in the memory semiconductor market, which has been in a slump for the past two years, as reported by Reuters on Wednesday.

Analyst Kim Roko from Hana Securities highlighted that despite Samsung’s diligent efforts in the HBM sector, the company’s stock performance has faltered. Roko mentioned, “Samsung is toiling away on HBM, but tangible results are yet to surface…In comparison to rivals, Samsung’s stock has lagged due to HBM.”

“While the debut of the 8-layer HBM3E might not suffice for market share expansion, anticipation looms for the anticipated 12-layer iteration expected towards year-end. I predict Samsung may pivot away from its current limitations and triumph with more cutting-edge offerings,” Roko added.

With a resurgence in global consumer electronics demand, tech firms are replenishing their chip inventories. DRAM chip prices surged by over a fifth in the three months leading to March, as indicated by Bernstein analysts.

A significant portion of Samsung’s operating profit flows in from semiconductors, with LSEG analysts anticipating a more than twofold increase in earnings for the firm this year. AI players like Nvidia are fueling the need for specialized and bespoke storage chips, potentially stabilizing the historically erratic market.

JPMorgan analysts foresee Samsung’s HBM revenue cresting at $13 billion in 2025, constituting 13% of its total semiconductor sales. This financial cushion could shield against market turbulence in the long haul.

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Critical Implications: In a landmark move in February, Samsung unveiled a groundbreaking memory chipset poised to revolutionize the AI landscape. Nvidia’s expressed interest in Samsung’s forthcoming high-bandwidth memory (HBM) chips led to a noteworthy upsurge in Samsung’s stock in March.

Nvidia’s CEO, Jensen Huang, prophesied that the ongoing “AI computing ramp” is just the tip of the iceberg and is expected to endure for multiple years, underscoring AI’s transformative potential in reshaping the memory chip sector.

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