Samsung's Q1 profit is expected to increase eightfold year-over-year, driven by the AI chip boom leading to a surge in performance.

An AI infrastructure construction boom has triggered a chip supply bottleneck. Samsung Electronics is reaping the benefits of higher pricing, with quarterly profit nearing the total for all of last year.

On April 7, Samsung Electronics released guidance for its first quarter of 2026 in Seoul. In an official announcement, Samsung said it expects consolidated operating profit for January to March this year to be about 57.2 trillion won (approximately $37.9 billion), up more than eightfold year over year—compared with only 6.69 trillion won in the same period last year.

This figure not only significantly exceeds market expectations. LSEG’s SmartEstimate had previously forecast Samsung’s first-quarter operating profit at 40.6 trillion won, but the actual result was higher by about 41%. Meanwhile, quarterly profit of 57.2 trillion won is already approaching Samsung’s total operating profit for all of 2025, and it raises the 20 trillion-won quarterly record set in the prior 2025 fourth quarter by nearly two times.

After the news was released, Samsung’s stock price rose as much as 4.6% in early trading on Tuesday to 202,000 won, outpacing the broad market composite index’s increase of about 2%. The gain has since narrowed to within 3%.

Chip price increases are the core driving force

Samsung’s earnings surge is rooted in the continued expansion of AI data center construction.

A large inflow of computing power demand has tightened the supply of traditional DRAM chips used in servers, pushing prices up sharply. According to Reuters, in the first quarter, chip contract prices nearly doubled. Research firm TrendForce expects that current-quarter DRAM contract prices will rise by more than an additional 50% from that level.

BofA Securities analyst Kim Sunwoo explained the logic behind the results exceeding expectations: “Because customers expect prices to rise further, actual contract prices are higher than what was expected—this is the reason the earnings came in above expectations.”

Analysts estimate that Samsung’s chip division’s quarterly operating profit is about 54 trillion won, accounting for roughly 95% of the company’s total profit. The mobile business contributes about 4 trillion won, benefiting from the drawdown of low-cost component inventory.

First-quarter consolidated revenue is expected to be about 133 trillion won, up about 68% year over year.

Catching up on HBM

About a year ago, Samsung’s CEO publicly apologized for the company’s weak performance and stock price showing. At that time, Samsung was trailing its Korean rival SK hynix in high-bandwidth memory (HBM) needed to supply Nvidia’s AI chip platform.

Samsung is now narrowing the gap with SK hynix by leveraging its latest-generation HBM4 chips, while also benefiting from a rebound in demand for traditional chips driven by AI inference needs. AI inference refers to the process in which AI models such as ChatGPT generate real-time responses; it consumes a large quantity of ordinary DRAM chips.

Meanwhile, U.S. memory chip maker Micron Technology also issued guidance last month that third-quarter revenue would exceed Wall Street expectations. It had already posted record performance in the second quarter, and the upside was also supported by strong AI demand alongside tighter supply.

A concern: the price-hike cycle may already be in its later stage

Despite the impressive results, concerns about the outlook are building.

Since Middle East hostilities began on February 28, rising energy costs and potential disruptions to the supply of key chip raw materials have clouded the demand outlook for AI data centers as well. Samsung’s stock has fallen 11% since the outbreak of the conflict, even though it is still up about 61% year to date.

NH Investment & Securities senior analyst Ryu Young-ho said: “Concerns that memory price gains have peaked are intensifying. At this point, it looks like we’ve moved beyond the initial phase of the upcycle and entered the later stage.” He added that how Samsung signs long-term contracts with customers to sustain semiconductor profitability will be key.

TrendForce senior vice president Avril Wu also noted that last week DRAM spot prices declined, citing that “end-user demand can’t absorb the elevated prices.” Spot prices are typically higher than contract prices, and their trajectory is seen as a leading indicator of market conditions.

In addition, Google’s TurboQuant memory-saving technology released last month is also considered one of the reasons behind the recent selloff in memory chip stocks.

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