Samsung's AI riches lag Nvidia's money machine

Samsung Electronics

08/10/2026 04:19

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Robyn Mak
HONG KONG, Oct 8 (Reuters Breakingviews) - Not all fortunes are created equal. South Korea's Samsung Electronics 005930.KS on Thursday unveiled quarterly operating profit guidance of $80 billion - a stonking artificial intelligence windfall by any standard. In fact, the $1.3 trillion chips-to-smartphone maker is on track to rake in a record $282 billion for the full year, pipping the expected $268 billion at Nvidia NVDA.O , per analyst forecasts on Visible Alpha. Yet investors value Samsung's earnings far less than at Jensen Huang's outfit, and for good reason.
As the world's largest memory-chip maker, Samsung is reaping the immense spoils of the AI frenzy. Its operating profit in the recent quarter alone is some two and a half times last year's total. Average prices of these data storage semiconductors, also known as DRAM chips, are up 20% quarter-on-quarter in the three months to September, analysts at Bernstein estimate. They are penciling in another 10-15% rise in the December period, citing "unrelenting" demand for conventional DRAM used in everything from PCs to smartphones as well as for specialised DRAM, referred to as high-bandwidth memory that is a vital component in Nvidia's graphics processing units.
Yet Samsung's stock commands a ho-hum multiple of 4 times one-year forward earnings, a hefty discount to Nvidia's roughly 17 times. One major reason is that memory is a relatively commoditised, not to mention notoriously cyclical industry. Analysts expect operating profit at Samsung to peak in 2029, whereas Nvidia's is forecast to keep going up, albeit at a slower pace, over the next five years.
Another factor is that Samsung's capital spending far exceeds the US chipmaker, which outsources manufacturing to Taiwan's TSMC 2330.TW. Investing in new factories in South Korea and the US, as well as in other businesses including smartphones and TVs, means Samsung's capex is forecast to top $64 billion next year, more than five times Nvidia's.
Samsung boss Jay Y. Lee must also juggle competing demands from employees and shareholders. In May, for instance, the company reached a tentative deal with its labour unions over tying bonuses to operating profits, and averted a strike by some 48,000 workers. That promptly drew the ire of minority shareholders, some of whom have launched lawsuits over the new compensation plans against the company's board and management. Disgruntled investors who have seen the stock slump more than a quarter since its June peak are also demanding that Samsung, whose stock remains up 120% this year, boost shareholder returns.
And if that weren't enough, President Lee Jae Myung's administration is determined to cash in on the country's AI windfall. It recently laid out a sweeping industrial strategy, anchored by Samsung and cross-town rival SK Hynix 000660.KS, involving over $576 billion in chip investments. Against this backdrop, Samsung's valuation discount to Nvidia may end up more enduring than its AI riches.
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CONTEXT NEWS
Samsung Electronics on October 8 forecast its operating profit for three months to end-September to be approximately 107.4 trillion won, or $80 billion. That compares to 12.2 trillion won in the same quarter last year.
The company will release detailed results, including a breakdown of earnings by business division, on October 29.

(Editing by Una Galani; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on MAK/  robyn.mak@thomsonreuters.com))