Samsung Electronics shares rise on AI chip demand

Samsung Electronics shares rose 3% on Tuesday, extending gains after reports highlighted robust demand for AI-focused chips that are expected to boost the company's earnings outlook.

The South Korean tech giant's stock climbed to a one-month high as traders priced in expectations of higher profitability from its advanced semiconductor division, which supplies high-performance memory and logic chips to data center operators and AI server manufacturers. Analysts at Samsung Securities and Mirae Asset Securities raised price targets on the stock, citing improving margins in the memory chip segment.

Market participants attributed the rally to optimism surrounding Samsung's role in the AI supply chain, particularly its production of high-bandwidth memory (HBM) chips, which are critical for training large language models. The company has been expanding HBM production capacity to meet surging demand from cloud computing providers.

Samsung Electronics is scheduled to report its second-quarter earnings on July 31. Analysts polled by Refinitiv expect net profit to rise 15% year-over-year to 10.2 trillion won ($7.5 billion), driven by strong sales in its semiconductor and display businesses. The company's guidance for the quarter will be closely watched for signs of sustained demand in AI-related segments.

The broader South Korean market, as measured by the Kospi index, also advanced 0.8%, reflecting broader investor sentiment tied to technology sector performance. Samsung Electronics, which accounts for nearly a fifth of the index's weighting, remained the top contributor to gains.

Investors will focus on whether the company can maintain its pricing power in the memory chip market amid competitive pressures from rivals such as SK Hynix and Micron Technology. Any signs of weaker-than-expected demand in AI applications could temper the current rally.