Samsung Electronics recently announced that it expects its profits for the second quarter of 2024 to increase significantly, jumping 15-fold compared to the same period last year. This surge in profits is attributed to an artificial intelligence (AI) boom that has driven up the prices of advanced chips, as Samsung is the world’s largest maker of memory chips, smartphones, and televisions.
The South Korean tech giant reported a more than 10-fold jump in profits for the first quarter of this year and is anticipating its profit to rise to 10.4tn won ($7.54bn; £5.9bn) for the upcoming quarter, surpassing analysts’ forecasts of 8.8tn won. Samsung’s announcement led to a more than 2% increase in its shares during early trading hours in Seoul.
Marc Einstein, chief analyst at Tokyo-based research firm ITR Corporation, highlighted the surging demand for AI chips in data centers and smartphones as a primary driver of Samsung’s profitability. The optimism surrounding AI technology has also contributed to a broader market rally, with companies like Nvidia experiencing significant growth.
Nvidia’s market value surpassed $3tn last month, briefly making it the world’s most valuable company. Analysts believe that the AI boom that propelled Nvidia’s success is also positively impacting Samsung’s earnings and the tech sector as a whole.
Samsung Electronics, a key subsidiary of the Samsung Group conglomerate, is set to face potential challenges next week as its workers plan a three-day strike starting on Monday. The union is advocating for a more transparent system regarding bonuses and time off for employees.
Conclusion
The surge in Samsung Electronics’ profit forecast amid the AI boom underscores the growing significance of advanced technology in shaping the global economy. As AI technology continues to drive innovation and demand for high-performance chips, companies like Samsung are positioned to capitalize on these opportunities. However, challenges such as labor disputes highlight the importance of maintaining a balance between corporate prosperity and worker welfare in the evolving digital landscape.
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