Securities firms shouting 'AI warm wind' Samsung Electronics...But what about the 'profit consensus'?

Expectations are growing that Samsung Electronics will deliver high-bandwidth memory (HBM) to NVIDIA by the end of the year. However, brokerages are modestly raising earnings consensus. HBM momentum is virtually excluded. This means that they are waiting for the actual results to materialize.

On July 3, Samsung Electronics shares ended the day flat, according to the financial investment industry. The stock price has recently risen above the 80,000 won mark, signaling a revival of momentum around AI semiconductors. However, further gains are somewhat limited.

The stocks of global AI semiconductor giant NVIDIA and Korean companies SK Hynix and Hanmi Semiconductor are also showing some signs of sluggishness. This can be considered a 'wait-and-see' market. However, Samsung Electronics' stock price has been relatively weak so far. As you can see, the key is high-bandwidth memory (HBM). Investors are still waiting for news of Samsung's delivery of HBM to NVIDIA.
The market is expecting Samsung to start delivering HBM in earnest. They're even raising their Target price.

In reality, however, securities firms are conservative on Samsung Electronics. A year ago, the consensus for SK hynix's sales among domestic securities firms was KRW 39.3109 trillion. As of the past July 2nd, the sales estimate was 66.87 trillion won, upwardly revised by 1.6 times during this period. During the same period, the operating profit consensus rose steeply from 6.10 trillion won to 21.63 trillion won.

The consensus for Samsung Electronics' revenue also changed from 29.8 trillion won to 310.811 trillion won and operating profit from 36.929 trillion won to 39.462 trillion won. Compared to the change in consensus for SK hynix and expectations for AI semiconductor growth, the increase in Samsung Electronics' consensus is quite low.

Typically, brokerage consensus lags the stock price. This is because they are conservative in their earnings forecasts and revise them in response to market trends and sentiment. Securities firms have a favorable outlook for Samsung Electronics. However, the size of the earnings consensus revision still raises doubts. "The market was expecting to see HBM results (related to NVIDIA) in the second quarter. However, Samsung hasn't really shown anything," said a researcher. "There are also growing doubts about whether it will pass the ongoing tests. The expectation is now for the 'second half' of the year." "At the end of the day, we don't expect a dramatic stock price increase unless we hear that Samsung will definitely deliver to NVIDIA," he concluded.

Currently, Samsung Electronics' stock price is moving at a low level even within the PBR band. SK Hynix's stock price is close to the top of PBR before receiving HBM momentum in earnest, which is quite different from its prediction of "improving constitution."

Meanwhile, it is said that Samsung Electronics is not easy to find a way out in the HBM market due to its enemy everywhere. "Everyone knows that NNVIDIA and TSMC have a strong relationship for a long time," said an analyst at a securities firm. "TSMC is wary of Samsung in the foundry sector, while SK Hynix, which has partnered with TSMC, is also competing with Samsung in the memory sector." He said, "The alliance between NVIDIA, TSMC and SK Hynix in the HBM market is getting stronger than expected."

Lee Sungkyu (lsk0603@fntimes.com)