Syed Imran Haider 
On Friday morning, Samsung Electronics saw its shares jump to their highest level since January 2021. There was a 2.24% increase in the stock price, which pushed it up to $62.73.
According to the South Korean giant, it expects to record better-than-expected profits in this year’s second quarter because of the massive demand for artificial intelligence (AI).
The guidance
On Friday, the company issued guidance in which it said that it expects its profits for the second quarter to rise to 10.4 trillion won, or $7.54 billion.
The April to June quarter last year had seen the company record a profit of 670 billion won. The numbers show that Samsung expects an increase of 1,452%.
This is higher than the estimated operating profit, which stood at 8.51 trillion won. Its revenue expectations, on the other hand, were mostly in line with estimates from analysts.
As per analysts’ estimates, revenue for the second quarter is expected to be around 73.7 trillion won.
According to estimates from Samsung itself, it expects its second quarter revenue to be between 73 trillion won and 75 trillion won.
The rebound
Last year, AI optimism pushed up the prices of memory chips and this worked in favor of the largest memory chip maker in the world.
In 2023, Samsung had seen record losses as the fall in demand for electronics and memory chips after COVID-19 left the entire industry reeling.
A wide array of consumer devices use the memory chips of the South Korean giant, which include computers and smartphones.
Back in April, Samsung had asserted that it expects demand for generative AI to dominate its second quarter. Meanwhile, its mobile devices have continued to see stable demand.
The company has taken some big measures in terms of generative AI with the launch of its Galaxy S24 Ultra smartphone. The device lets you use AI to edit photos and search for things online.
The complications
However, experts have pointed out that the earnings surprise from Samsung is not necessarily positive. The upside in the earnings is mostly due to the high memory price.
The HBM (high-bandwidth memory) production of the company is lagging behind due to which there has been reduced supply to Nvidia.
The AI boom has pushed up the demand for AI chipsets and HBM are advanced memory chips that are a vital element of these chipsets.
The AI boom has benefitted Samsung significantly, since it it is the world’s leading memory chipmaker. Likewise, the other leading memory chipmaker SK Hynix has also reaped the benefits.
Reports in May revealed that Samsung Electronics had not yet qualified as a supplier for Nvidia’s AI processors.
It said that Samsung was only a potential that Nvidia was considering to use for HBM chips. But, Samsung has claimed that all its tests are on track.
Therefore, analysts said that it was mostly the memory price high that had pushed up Samsung and not HBM because this product was experiencing delays.
