Samsung Electronics' Q1 Profit Expected to Soar Eightfold Year-on-Year as AI Chip Boom Drives Performance Surge

The AI infrastructure construction boom has triggered a chip supply bottleneck, and Samsung Electronics is reaping the benefits of price hikes, with its single-quarter profit nearly equaling its total profit for the entire previous year.

On April 7, Samsung Electronics released its first-quarter 2026 performance guidance in Seoul. According to Samsung's official announcement, the company expects its consolidated operating profit for January to March this year to be approximately 57.2 trillion South Korean won (approximately $37.9 billion), an increase of more than eightfold year-on-year – compared to only 6.69 trillion South Korean won in the same period last year.

This figure not only significantly exceeded market expectations. LSEG's SmartEstimate had previously predicted Samsung Electronics' first-quarter operating profit to be 40.6 trillion South Korean won, making the actual result about 41% higher. Meanwhile, the single-quarter profit of 57.2 trillion South Korean won is close to Samsung Electronics' total operating profit for the entire year of 2025 and nearly triples the previous quarterly record of 20 trillion South Korean won set in the fourth quarter of 2025.

Following the announcement, Samsung Electronics' share price rose as much as 4.6% to 202,000 South Korean won in early trading on Tuesday, outperforming the broader market index's approximately 2% gain. The gains have since narrowed to within 3%.

Chip Price Hikes are the Core Driving Force

Samsung Electronics' performance surge this time is rooted in the continuous expansion of AI data center construction.

A massive influx of computing power demand has led to tight supplies and rapid price increases for traditional DRAM chips used in servers. According to Reuters, chip contract prices nearly doubled in the first quarter. Research firm TrendForce expects DRAM contract prices to increase by more than 50% further in the current quarter.

Bank of America Securities analyst Kim Sunwoo explained the logic behind the results: "Because customers anticipated further price increases, actual contract prices were higher than expected, which is precisely why the performance exceeded expectations."

Analysts estimate that Samsung Electronics' chip division's single-quarter operating profit was approximately 54 trillion South Korean won, accounting for about 95% of the company's total profit. The mobile business contributed about 4 trillion South Korean won, benefiting from the digestion of low-cost component inventory.

Consolidated revenue for the first quarter is expected to be approximately 133 trillion South Korean won, an increase of about 68% year-on-year.

HBM Catch-Up Progress

About a year ago, the CEO of Samsung Electronics publicly apologized for the company's poor performance and stock price. At that time, Samsung Electronics was lagging behind its South Korean competitor, SK Hynix, in supplying High Bandwidth Memory (HBM) for NVIDIA's AI chipsets.

However, Samsung Electronics is now narrowing the gap with SK Hynix through its latest generation HBM4 chips, while also benefiting from the recovery in demand for traditional chips driven by AI inference demand—AI inference refers to the process by which AI models like ChatGPT generate responses in real-time, which consumes large amounts of ordinary DRAM chips.

During the same period, US memory chip manufacturer Micron Technology also forecast its Third Quarter Profit would exceed Wall Street expectations last month, following record performance in its second quarter, similarly benefiting from strong AI demand and tight supply.

Concerns: Price Increase Cycle May Have Entered Its Late Stages

Despite the stellar performance, market concerns about future trends are escalating.

Since the outbreak of the conflict in the Middle East on February 28, rising energy costs and potential disruptions to the supply of key chip raw materials have cast a shadow over the demand outlook for AI data centers. Samsung Electronics' stock price has fallen by 11% since the conflict began, although it remains up about 61% year-to-date.

Ryu Young-ho, a senior analyst at NH Investment & Securities, stated, "Market concerns about memory price hikes peaking are growing. It seems we have passed the early stage of the upcycle and entered the late stage." He pointed out that how Samsung Electronics secures long-term contracts with customers to maintain semiconductor profitability will be key.

Avril Wu, Senior Vice President at TrendForce, also noted that DRAM spot prices fell last week because "end-user demand is finding it difficult to digest high prices." Spot prices are typically higher than contract prices, and their trend is seen as a leading indicator of market sentiment.

Furthermore, Google's TurboQuant memory-saving technology, released last month, is also considered one of the reasons for the recent sell-off in memory chip stocks.