Samsung Electronics Co., which may have lagged behind the global semiconductor stock rise over the last year, is well-positioned to take the lead with renewed confidence in its artificial intelligence approach.
Investors are beginning to grasp that AI will increase demand for high-bandwidth memory, which is dominated by rival SK Hynix Inc., and NAND, where Samsung has the greatest market share.
Given the advantages of AI and indications of a wider recovery in memory demand and prices following a protracted decline, analysts have been increasing their price forecasts for Samsung.
Fund managers have started to transfer money into the company to profit from Samsung. The Seoul-listed company is having a great upside following a meager 32% rise, even though AI powerhouse Nvidia Corp. has tripled in the last 12 months and its primary HBM supplier SK Hynix has more than doubled.
According to Christine Phillpotts, portfolio manager at Ariel Investments LLC, “We’ve started reducing our holding in SK Hynix and allocating it to other parts of the memory chip value chain that haven’t benefited as much, like Samsung Electronics, where we think that upside hasn’t yet been realized. “
Since Jensen Huang of Nvidia’s support in March heightened anticipation for an HBM supply arrangement later this year, Samsung has outperformed rival AI equities. That would give it a significant advantage over smaller SK Hynix, which is thought to possess a 90% share in the most recent HBM version.
A recent report by Citigroup suggests a potential shift in the technology landscape, with solid-state drives (SSDs) poised to displace hard-disk drives (HDDs) in AI applications. Analyst Peter Lee predicts a “replacement cycle” favoring SSDs, particularly benefiting Samsung, as they offer faster performance and are better suited for AI training.
This perspective contradicts the prevailing market belief but has led to increased price targets for Samsung by analysts. The company’s operating profit for the first quarter surpassed expectations, signaling a positive outlook for earnings.
Samsung’s stock performance has shown improvement, with a recent 15% rise over the past month, positioning it as a top pick for investors like Jae Lee, chief investment officer at Timefolio Asset Management SG.
Also Read: OnePlus Unveils AI Photo Tool, Emulating Google & Samsung
