Samsung Electronics shares fall despite record third-quarter profit

Samsung Electronics reported third-quarter earnings on Thursday, with operating profit broadly in line with analysts' estimates, while its shares closed 4.13% lower after earlier losses of as much as 5%. The company posted record revenue and profit for a fourth straight quarter, including what it said was the first global technology company to top 100 trillion won in quarterly operating profit.

Third-quarter results

Revenue was 195.25 trillion won ($124 billion), compared with 195.79 trillion won expected, while operating profit was 107.44 trillion won, compared with 107.66 trillion won expected. Revenue rose 126.88% year on year and 13.85% from the previous quarter, and operating profit rose 783.11% from a year earlier. Samsung also announced 30 trillion won in cash dividends for the quarter, equal to 4,601 won per common and preferred share, and plans to return another 55 trillion to 75 trillion won to shareholders this year through dividends and share buybacks, with the board set to finalize total shareholder returns and execution plans at a meeting scheduled for late January 2027.

Semiconductor and memory performance

The semiconductor business reported 147.1 trillion won in revenue and 106.5 trillion won in operating profit, driven by strong demand for AI-related memory chips. The memory business also achieved record quarterly revenue and operating profit, supported by a significant ramp-up in HBM4 sales and growing demand for server solid-state drives.

Market reaction and outlook

Josh Gilbert, lead analyst for APAC at investment platform eToro, said investors have been so spoilt by the AI trade that a record result is now treated as the bare minimum rather than a reason to celebrate. He said Samsung's chip business accounted for nearly all of its operating profit in the third quarter, highlighting its growing reliance on memory chips, and that the company's fortunes now depend heavily on memory prices. Looking ahead, Samsung expects AI infrastructure investment to accelerate in 2027, with rising demand likely to further tighten memory supply, and plans to increase sales of HBM and other memory products used in servers and data storage.

Investments and partnerships

In the third quarter, Samsung Electronics and five of its affiliates announced a combined $1 billion investment in KKR-backed Helix Digital Infrastructure, with Samsung Electronics investing $500 million and the remaining amount coming from its affiliates. The company also announced a partnership with French AI startup Mistral AI to use AI technologies in its semiconductor operations, including chip design and manufacturing, and led Mistral's Series D funding round.

Sources: CNBC