Samsung market cap tops 500 trillion won ahead of earnings announcement

Samsung Electronics's share closing at 85,000 won on Tuesday's session appears on a screen at Yonhap Infomax in central Seoul. [YONHAP]

Samsung Electronics' market capitalization has surpassed 500 trillion won ($370 billion) for the first time in three years, boosted by anticipation for the company's AI chips and its preliminary earnings announcement set for April 5.

The market bellwether's market cap reached 506.8 trillion won on Tuesday as its stock price rose 3.66 percent to close at 85,000 won.

It marks the first time since April 20, 2021, that the tech giant saw its market cap exceed the 500 trillion won level.

On Wednesday, the figure retreated to 502 trillion won, but still hung above the threshold, with the stock losing 1.06 percent to close at 84,100 won.

Foreign investors were the main driver behind the increase, buying over 5 trillion won for 11 days straight.

According to Korea Exchange, foreign investors bought a net 5.07 trillion won in Samsung Electronics shares from March 19 to April 2.

During the same period, retail investors sold over 6 trillion won in company shares.

The continued foreign buying derives from positive expectations for the semiconductor industry, stemming from the U.S.

Nvidia CEO Jensen Huang said that Samsung's high-bandwidth memory (HBM) chips are currently in the "qualifying" process and expressed his high expectations for them at the GTC 2024 event held in San Jose, California.

HBM is considered an essential component of AI chips, enabling the faster processing of large volumes of data.

Samsung Electronics announced in February that the development of its first, 12-layer HBM3E chip, which Huang mentioned, is slated for mass production in the first half of the year.

Following the announcement, shares of U.S.-based semiconductor company Micron Technology rose by 5 percent to hit a record high on Monday, boosting market sentiment for semiconductors.

The rise follows Bank of America lifting Micron Technology’s target price to $140 from its previous $122 per share, as it expects an increase in HBM sales.

Securities firms expect improved sales performance from Samsung Electronics ahead of its preliminary earnings announcement on Friday.

According to FnGuide Tuesday, analysts estimated Samsung Electronics sales for the first quarter to be 72.66 trillion, up 14 percent compared to the same period last year.

They expect an operating profit of around 5.19 trillion won, increasing by a whopping 711.8 percent.

“The capital inflow occurred thanks to an expectation of improvement in sales performance as the industry recovered, alongside the increase in price for data centers and industrial solid-state drives (SSD) following the demand for AI,” Lee Jae-won, an analyst from Shinhan Securities, said.

“Micron Technology’s shares hitting a record high, expectations surrounding AI through HBM and the momentum from NAND flash chips hitting a surplus added toward the positive movement.”

SK hynix stock is also skyrocketing, following the trend.

SK hynix closed at 186,300 won, up 0.43 percent from the previous session on Tuesday.

Its shares surged by 31.7 percent compared to early this year as foreigners led the rise.

Foreigners bought a net 1.66 trillion won in shares from early this year to Tuesday.

Some securities firms raised the company’s price objective to 236,000 won, a 26.7 percent increase from Tuesday's session.

The performance forecast for SK hynix is also positive.

According to FnGuide, securities firms estimated SK hynix’s first quarter consolidated sales this year to stand at 11.98 trillion won and its operating profit at 1.47 trillion won.

Estimated sales are up by 135.4 percent compared to the same period last year and its operating profit is expected to enter a surplus.

“SK hynix is expected to take the lead in the AI industry expansion until next year, considering that HBM will continue to highly contribute to its profit over the mid-term,” Ko Young-min, a researcher at Daol Investment & Securities said.

BY KIM KYUNG-JIN [kim.jiye@joongang.co.kr]