Samsung's AI riches lag Nvidia's money machine
Samsung forecast third-quarter operating profit of about $80 billion and is on track for a record $282 billion for the year, compared with analyst expectations of $268 billion for Nvidia. Samsung trades at about four times forward earnings, versus roughly 17 times for Nvidia.
1. AI demand lifts profits
Samsung forecast operating profit of about $80 billion for the three months ended September, up from 12.2 trillion won a year earlier. Analysts estimate average DRAM prices rose 20% in the quarter and expect a further 10% to 15% increase in the December period, citing demand for conventional and high-bandwidth memory.
2. Valuation and spending gap
Samsung trades at about four times one-year forward earnings, compared with roughly 17 times for Nvidia. Analysts expect Samsung's operating profit to peak in 2029, while Nvidia's is forecast to keep rising over the next five years, though more slowly. Samsung's capital spending is forecast to exceed $64 billion next year, more than five times Nvidia's.
3. Shareholder pressures
Samsung reached a tentative deal with labor unions in May to tie bonuses to operating profits, averting a strike by about 48,000 workers; some minority shareholders have sued over the compensation plans. South Korea's government has outlined a chip investment strategy involving more than $576 billion, anchored by Samsung and SK Hynix. Samsung will release detailed results on October 29.
