Samsung Electronics Co., Ltd. (OTC:SSNLF) just delivered the most profitable quarter in the company’s history, but Asian investors responded by dumping the stock nearly 7% in Seoul.
First-quarter revenue reached 133.87 trillion won (about $90 billion) and operating profit hit 57.23 trillion won (about $38 billion), both records, up 69% and 756% from a year earlier.
The Device Solutions chip division booked 81.7 trillion won in sales (about $55 billion) and 53.7 trillion won in operating profit (about $36 billion), roughly 94% of the company total.
The consumer arm that makes Galaxy phones, televisions and appliances turned 52.7 trillion won in sales (about $35 billion) into just 3.0 trillion won (about $2 billion) in profit.
It is the most lopsided earnings mix Samsung has ever reported, and it points one way: memory. Blended prices jumped more than 90% from the prior quarter for DRAM and near 90% for NAND.
Samsung’s memory chief Jaejune Kim said the company “started shipping industry’s first mass-produced HBM4 and SOCAMM2,” the chips that feed AI accelerators.
The Second-Quarter Earnings Guidance Now Tops Nvidia
Samsung guided to second-quarter sales near 171 trillion won (about $112 billion) and operating profit around 89.4 trillion won (about $59 billion), up 56% from the first quarter and close to nineteenfold from a year earlier.
That 1,810% jump alone tops the company’s entire profit for all of last year.
Samsung’s guided operating profit would clear the roughly $53.5 billion Nvidia Corp. (NASDAQ:NVDA) and the roughly $50.9 billion Apple Inc. (NASDAQ:AAPL) posted last quarter.
Chief Financial Officer Sooncheol Park told investors the company expects “memory prices to stay on an upward trend, driven by ongoing expansion in AI infrastructure.”
So Why Did The Stock Fall 7%?
Because the number beat and the market sold anyway.
Operating profit cleared the roughly 85 trillion won analysts modeled, but revenue slipped just under the 172 trillion won consensus, a rare miss.
The stock had run about 415% in a year and closed at a record 358,500 won on June 25, walking into the print priced for perfection.
‘You Cannot Do AI Without Memory’
Ray Wang, founder and principal analyst at Constellation Research, told Bloomberg TV the selloff is about timing, not fundamentals.
“You cannot do AI without memory,” he said, citing an 18-to-24-month backlog and a market where Samsung, SK Hynix Inc. and Micron Technology, Inc. (NASDAQ:MU) hold about 85% of supply.
“The demand is real,” he said, placing the AI buildout in only its “third inning.”
The market fear, in his telling, is the cycle’s brutal history. “You don’t know what a high is until you see the low,” Wang said, referring to investors afraid to buy at the top.
His own read runs the other way. “It’s a good time to be in memory,” he said. Samsung’s commentary backs him.
Kim said the supply fulfillment rate had fallen to a record low, with customers booking capacity into 2027 and HBM4 sold out.
Is Samsung Cheap Now? What A Forward P/E Of 5 Means
Here is the paradox. A company printing record profit trades near 5 times forward earnings, well under its long-run average of around 14 times and close to the lowest levels in its history.
Forward price-to-earnings ratios divide today’s price by next year’s expected profit, and analysts are lifting those estimates faster than the shares can follow.
Cheap on paper, but the market is pricing in a fading boom.
Investors have seen this film.
The 2018 super-cycle drove a then-record 58.89 trillion won annual operating profit before DRAM prices collapsed and 2019 profit roughly halved. What differs now is the demand source.
HBM capacity is sold out and Samsung guides the shortage to last into 2028.
Is the top of the AI memory cycle, or a rare discount on the cheapest mega-cap in technology?
Photo by Arcansel via Shutterstock
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