Samsung profit surges 1,800% on AI chip demand, despite market jitters

Samsung Electronics has announced a staggering 1,813.8% year-on-year jump in operating profit for the second quarter, driven by the insatiable global demand for artificial intelligence. The South Korean tech giant posted an operating profit of 89.49 trillion won (US$62 billion) for the April-June period, significantly exceeding market expectations.

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The firm posted revenue of 171.49 trillion won, up 130 per cent from a year earlier.

The company's revenue also saw a substantial increase of 130% from the previous year, reaching 171.49 trillion won. Net profit soared by an astonishing 1,299.9% to 71.62 trillion won. This performance is largely fueled by the booming market for memory chips, especially high-bandwidth memory (HBM), which is crucial for AI processors powering applications like chatbots and image generation.

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Its net profit soared 1,299.9 per cent on-year to 71.62 trillion won, it said.

Samsung, along with rivals SK hynix and US-based Micron, are the leading manufacturers of these critical HBM chips. Analysts predict this boom will continue as major North American tech companies accelerate investments in AI data centers, requiring cutting-edge components. The increased AI expansion has also positively impacted prices and shipments of conventional NAND and DRAM memory chips, benefiting Samsung.

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The earnings met market expectations, South Korea's Yonhap news agency said, citing its own financial data firm.

However, the impressive earnings come amidst a volatile stock market. South Korean stocks, including Samsung and its competitor SK hynix, experienced sharp sell-offs. Investors are reportedly growing nervous about the long-term realism of high AI-driven profit forecasts, even as companies like SK hynix also reported significant profit increases, albeit below expectations. Samsung's stock fell over 12%, while SK hynix tumbled nearly 20%.

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The boom results were posted despite South Korean stocks suffering a sharp sell-off on Wednesday as nervous traders unwound AI-driven bets, fretting whether lofty profit forecasts are realistic.