Samsung forecasts record Q3 operating profit of 107.4 trillion won on AI memory demand
Samsung Electronics on Thursday reported preliminary third-quarter operating profit of 107.40 trillion won ($80.2 billion). It is the first time in the company's history that quarterly operating profit has passed 100 trillion won. CNBC attributes the result to booming demand for artificial intelligence, which continues to fuel the chips business.
The projected operating profit is 782% higher than a year earlier. Samsung's revenue forecast for the quarter is about 195 trillion won, up nearly 127% from the same period last year. The figures are preliminary; the source describes the revenue as a forecast and the profit as projected.
Shares nonetheless dropped 0.7% on Thursday morning. Josh Gilbert, lead analyst for APAC at investment platform eToro, said: "Samsung has delivered a record profit and still fallen short of expectations, which tells you just how demanding the AI trade has become. When expectations are so high for memory makers, the market doesn't hand out points for effort."
Gilbert added that with AI spending driving demand for memory and supply remaining tight, the larger story of the chip sector remains intact. He pointed to the growth of AI agents, which can consume far more memory than a chatbot answering a single question. He also said memory buyers are committing to multiyear supply agreements, giving Samsung greater visibility over demand in a business where investors have always worried about the next downturn.
For context, in the second quarter Samsung posted record revenue of 171.5 trillion won and record operating profit of 89.5 trillion won, driven by its memory business. The company has also stepped up AI-related investments and partnerships. In September it announced a strategic partnership with French AI startup Mistral AI, with plans to deploy the startup's models across its semiconductor operations. Samsung is expected to release its full third-quarter earnings, including a breakdown by business division, later this month.
Key facts
- Samsung Electronics reported preliminary Q3 operating profit of 107.40 trillion won ($80.2 billion), the first time it has passed 100 trillion won.
- Projected operating profit is 782% higher than a year earlier; forecast revenue of about 195 trillion won is up nearly 127%.
- The previous quarter's record was 89.5 trillion won in operating profit and 171.5 trillion won in revenue, driven by memory.
- Shares fell 0.7% on Thursday morning; eToro's Josh Gilbert says the profit still fell short of expectations.
- The full Q3 earnings, with a breakdown by business division, are expected later this month.
Why it matters
A quarterly operating profit above 100 trillion won is a first for Samsung, and it comes one quarter after the previous record of 89.5 trillion won. CNBC ties the jump to AI demand for the company's chips business, and the second-quarter record was driven by memory. Gilbert's point is that AI agents can use far more memory than a chatbot answering one question, and that supply remains tight. The share dip shows how high expectations for memory makers have become.
Who it affects
Investors in Samsung and in memory makers, who are weighing a record result against expectations that were higher still. Memory buyers are also affected: according to Gilbert, they are committing to multiyear supply agreements while supply stays tight. Mistral AI is mentioned as a partner whose models Samsung plans to deploy across its semiconductor operations.
How to use it
This is an earnings report rather than a product, so there is nothing to adopt. The next thing to watch is the full third-quarter earnings release expected later this month, which is to include a breakdown by business division and should show how much of the profit came from memory.
How solid is it
The figures come from Samsung's own preliminary report as relayed by CNBC. The source calls the profit "projected" and the revenue a "forecast", so final numbers may differ in detail. The explanation that AI demand drove the result is CNBC's own framing; the market commentary is Gilbert's view as an eToro analyst. The source does not say the profit is the highest quarterly profit ever for any tech firm, only that it is Samsung's first above 100 trillion won.
Risks and caveats
The shares fell 0.7% on Thursday morning, and the source does not say how long the drop lasted. Gilbert says the profit fell short of expectations, though the source gives no consensus figures or the size of the miss. He also notes that investors in memory have always worried about the next downturn. No divisional breakdown is available until the full results, and the source gives no financial terms for the Mistral AI partnership.
“Samsung has delivered a record profit and still fallen short of expectations, which tells you just how demanding the AI trade has become”
— Josh Gilbert, lead analyst for APAC at eToro