Samsung's single-quarter profit exceeds Nvidia, where is the AI storage-driven semiconductor supercycle heading?

July 7, 2026 (Beijing Time), Samsung Electronics announced its preliminary second-quarter results for 2026. This preliminary report, pending final settlement, dropped a bombshell across the semiconductor industry and even the global capital markets.

According to Samsung Electronics' regulatory filing, second-quarter preliminary operating profit was 89.4 trillion Korean won (approximately $58.4 billion), up about 1,810% year-on-year; preliminary consolidated revenue was 171 trillion Korean won (approximately $111.8 billion), up 129.3% year-on-year. This preliminary data has significantly exceeded the average analyst estimate of 84.2 trillion won. Sequentially, operating profit grew 56.2% from 57.2 trillion won in the first quarter, and revenue increased 27.7% from 133.9 trillion won. Sales and operating profit have set new historical highs for three consecutive quarters since Q4 2025.

When releasing the preliminary results, Samsung Electronics clearly stated that these are estimates based on the Korean International Financial Reporting Standards (K-IFRS), the settlement has not yet been completed, and the final official results will be announced at the end of July 2026.

More notably, these preliminary results have already set aside funds for implementing the labor-management agreement and raising performance bonuses. Samsung Electronics had previously reached an agreement with the union to allocate 10.5% of operating profit as bonus funds, in addition to existing performance-based pay. Due to prolonged negotiations, no such provision was made in Q1 2026, so the estimated bonus provision for the first half of 2026 is between 19 trillion and 25 trillion Korean won. Industry insiders generally believe the provision scale is close to 20 trillion won. Taking this into account, Samsung Electronics' actual operating profit generation capacity may have exceeded 100 trillion won.

In U.S. dollar terms, Samsung's quarterly preliminary operating profit has surpassed Nvidia's $894k (approximately 82 trillion won) in the first quarter of fiscal 2027, making it the world's highest quarterly operating profit company. Samsung's Q2 2026 preliminary operating profit also exceeded its total profit of 43.6 trillion won for the full year 2025, and surpassed the combined profit for the three years 2023 to 2025.

However, on the day of the preliminary earnings release, Samsung Electronics' stock price once plunged about 6% to 8% during trading, eventually closing down about 5.35% at 301,000 won. The divergence between performance and stock price reflects deep market anxiety over the sustainability of the AI semiconductor cycle—how much longer can this AI-driven memory chip super cycle last?

HBM Demand Explosion: The Core Driver Behind the Preliminary Results

Breaking down Samsung's 89.4 trillion won quarterly preliminary profit, the Device Solutions (DS) semiconductor division is the absolute core. Analysts estimate that the DS division alone achieved an operating profit of about 80 trillion won, contributing the vast majority of the group's profit.

The core logic behind the explosive profit growth lies in the sharp increase in memory chip prices. According to market research data, in Q1 2026, Samsung ranked first in the global DRAM market by revenue with a 38.5% market share. In Q2, DRAM and NAND prices continued their upward trend, with DRAM contract prices rising over 40% quarter-on-quarter and NAND rising over 50%. In Q1 2026, Samsung's DRAM revenue surged 93.4% quarter-on-quarter to $37.32 billion.

Behind the price increases is a structural supply-demand imbalance. Strong demand for HBM from AI data centers has led Samsung, SK Hynix, and other memory giants to prioritize 12-inch wafer capacity for HBM production. The direct consequence of shifting capacity to high-end products is a severe shortage of general-purpose memory chips like DDR4 and DDR5, driving up prices across all categories. Analysts expect this shortage to persist at least until 2027.

In the HBM field, Samsung is accelerating its catch-up. Samsung was the first in the world to mass-produce the sixth-generation HBM, HBM4, in February 2026, and related sales surpassed $1 billion (approximately 1.5 trillion won) within about four months. Bernstein analysis estimates Samsung's HBM revenue in Q2 at about $4.7 billion, up 32% quarter-on-quarter. Analysts note that Samsung has allocated about half of its monthly HBM DRAM wafer input of approximately 150k wafers to HBM4, with the remaining capacity for 12-layer HBM3E. HBM4 certification is progressing rapidly, with mass production expected to start after completion in Q2. This proactive capacity结构调整 reflects Samsung's sustained bet on high-end HBM demand.

Profit Carnival and Stock Price Dive: What the Market Fears

On the day of the earnings release, Samsung's stock price once plunged about 6% to 8%, dragging down South Korea's KOSPI index, which once fell over 4%, triggering a circuit breaker. SK Hynix also fell about 2.6% to 5.5% on the same day.

This "buy the rumor, sell the news" market reaction reveals the capital market's complex judgment on the AI semiconductor cycle. Industry insiders point out that amid the historic AI infrastructure buildout globally, investors had placed extremely high expectations on chipmakers like Samsung and SK Hynix. Samsung Electronics' strong performance was no secret, and the stock price had already risen considerably. When the results actually materialized, it became a window for profit-taking.

A deeper concern lies in the judgment of the cycle's position. Just last week, Meta sent cautious signals about future capital expenditure plans, sparking concerns that tech giants might cut spending. High-beta momentum stocks experienced their largest two-day rout since the pandemic. Brian Cho, portfolio manager at Causeway Capital Management, a global equity asset manager, noted that the market now places more weight on whether a company's annual free cash flow generation has achieved a sustainable step-change, and management's shareholder return policy will also be a focus.

Additionally, Samsung's stock performance has consistently lagged behind its domestic rival SK Hynix. Because SK Hynix's business is more focused on high-end memory tailored to AI computing demands, its stock has risen substantially since the beginning of 2026. On the competitive landscape, Samsung also faces periodic competitive pressure on market share from emerging players like ChangXin Memory Technologies (CXMT).

Three-Pronged Logic Analysis of the Cycle's Sustainability

Regarding the core question of "how long can the AI semiconductor boom cycle last," we can deduce logically from three dimensions: demand, supply, and capacity expansion.

Demand Side: Capital Expenditure Still Expanding, Demand Foundation Strengthening

In a research report released on July 1, 2026, Nomura clearly warned: the AI semiconductor cycle is far from peaking, and the second half of 2026 may see an "epic" supply chain mismatch. The number of new global data center projects tracked by the firm has increased from about 240 at the end of March 2026 to about 280, with gigawatt-scale projects rising from over 40 to about 50. Based on this, new global data center deployment capacity is expected to increase from 26 GW in 2026 to 32 GW in 2027. The deployment scale for 2027-2028 corresponds to demand for approximately 4 to 6 million AI chips per year.

Hyperscale cloud providers—Microsoft, Google, Meta, Amazon—continue to advance data center deployments globally. Meanwhile, AI companies like OpenAI, xAI, and CoreWeave, along with "new cloud" operators, are becoming important sources of incremental demand. Meta signed a long-term AI cloud capacity agreement with CoreWeave worth $21 billion, extending through 2032.

JPMorgan further noted in a July 2026 research report that the chip upcycle will last at least until 2028. HBM supply from multiple memory chip makers is sold out through 2026, and new wafer capacity is not expected to materially come online until after 2028.

Supply Side: Real Bottlenecks in Capacity Expansion

On the other side of sustained demand expansion are real bottlenecks in supply expansion. Building a new fab typically takes about two years. After cloud providers significantly raised their AI chip and server procurement expectations in late 2025, the supply chain began accelerating expansion, but these new capacities are unlikely to be fully released before 2027.

TSMC's next significant front-end capacity expansion will not materialize at scale until after 2028. More critically, supply bottlenecks are spreading from TSMC-controlled CoWoS advanced packaging to a wider range of component segments—IC substrates, PCBs, CCLs, high-end capacitors, power management chips, optical components, thermal and power equipment—all of which could become new constraints on AI server delivery volumes.

Analysts generally believe that due to supply constraints from clean room shortages, the memory market supply shortage is expected to persist until the end of 2027. Samsung Securities researcher Lee Jong-wook believes the memory market is still in the "first half of the cycle." Samsung Securities predicts that due to slowing bit growth in both DRAM and NAND, memory supply-demand tightness will continue into 2026, with quarterly operating profit potentially exceeding 100 trillion won and maintaining that level for more than a year.

Capacity Expansion: Balancing Long-Term Confidence and Short-Term Risks

The existence of supply bottlenecks precisely explains why major players are expanding capacity aggressively. Samsung has announced spending plans for capacity expansion and R&D in 2026 exceeding $70 billion. Samsung Group and SK Group plan to build two new chip manufacturing plants each in southwestern South Korea, with a combined investment of 800 trillion won, aiming to double South Korea's memory chip production capacity within five years. Samsung Securities describes Samsung Electronics' large-scale memory investment plans and the early mass production of the Pyeongtaek P5 plant as moves demonstrating confidence in long-term demand.

TSMC is expected to raise its 2026 capital expenditure to between $52 billion and $56 billion, implementing a 5% to 10% price increase for advanced processes. TSMC expects 2026 U.S. dollar revenue to grow nearly 30%, with core momentum coming from the explosion in computing power demand driven by the evolution of AI technology from generative AI to agentic AI.

However, large-scale expansion also introduces cyclical risks. Market research firm Counterpoint also issued a warning in its report, stating that some believe such high profit margins have already constituted "excessive profiteering," and if this situation persists, memory chip makers may face pressure from regulators in the future. UBS Asset Management recommended selective investment in AI on July 6, 2026, to cope with market volatility, noting that the market will continue to experience high volatility as it weighs the strong adoption of AI agents against the risk of slowing capital expenditure growth.

Synthesizing the three-pronged logic, the current AI semiconductor boom cycle has a solid foundation for continued expansion on the demand side, faces real and near-term irresolvable bottlenecks on the supply side, and confronts a dynamic balance between long-term expansion and short-term risks on the capacity side. The core contradiction supporting the cycle's uptrend—demand growth outstripping supply expansion—is unlikely to reverse fundamentally at least before 2027.

Conclusion

Samsung Electronics' preliminary Q2 2026 operating profit of 89.4 trillion Korean won is a concentrated manifestation of AI memory demand and direct proof of the energy of this semiconductor super cycle. It must be emphasized that these results are still preliminary estimates; the final official financial report will be released at the end of July 2026. A single quarter's preliminary profit exceeding the sum of the past three years and surpassing Nvidia as the world's most profitable company on a quarterly basis—these numbers themselves constitute the most powerful empirical response to the question of whether "AI investment is a bubble." This preliminary result also includes a provision of approximately 20 trillion won for performance bonuses; excluding this factor, the actual profit generation capacity is even more impressive.

However, the stock price signal given by the market is equally noteworthy. When a company's quarterly profit reaches the magnitude of 89.4 trillion won, the market naturally asks: how long can the growth slope be maintained? Institutions like Nomura and JPMorgan project the cycle peak to 2027-2028, based on the structural imbalance between sustained demand expansion and real supply bottlenecks. Meanwhile, the high volatility risk highlighted by UBS and others, along with concerns about potential overcapacity from massive expansion, are also variables that cannot be ignored.

TrendForce's latest forecast shows that in Q3 2026, the overall DRAM landscape remains extremely tight, but contract price increases are converging, with an expected quarter-on-quarter increase of 13% to 18%. NAND Flash primary demand remains supported by AI inference and large-scale data center construction, with contract prices expected to rise 10% to 15% quarter-on-quarter. The price increase trend continues but the magnitude narrows—this is a classic characteristic of the cycle moving from the "explosion phase" to the "verification phase."

For investors, the core judgment revealed by Samsung's preliminary earnings may be: the AI semiconductor boom cycle is far from over, but the market's pricing of the cycle has shifted from the "expectation phase" to the "verification phase." The key variable going forward is no longer "whether AI demand exists," but "whether the growth rate of AI demand can continue to outpace the speed of supply expansion"—and the answer to this question will gradually unfold over the next 12 to 24 months.

FAQ

Q: Is the data showing Samsung Electronics' Q2 2026 earnings growth of about 19 times the final confirmed value?

A: No. This data is the preliminary earnings estimate released by Samsung Electronics on July 7, 2026, calculated based on the Korean International Financial Reporting Standards (K-IFRS). The settlement has not yet been completed. The final official results will be announced at the end of July 2026. The currently announced 89.4 trillion won operating profit and 171 trillion won revenue are both preliminary data.

Q: What does it mean that Samsung's quarterly profit surpassed Nvidia's?

A: Samsung's preliminary operating profit of 89.4 trillion won (about $58.4 billion) for this quarter exceeded Nvidia's $1.71M last quarter. This marks a significant increase in the profit distribution weighting of memory chip makers in the AI supply chain, showing that the benefits of AI infrastructure construction have expanded from computing chips to the entire semiconductor supply chain.

Q: How much longer is the AI semiconductor boom cycle expected to last?

A: Institutions like Nomura and JPMorgan expect the upcycle to continue at least until 2027-2028. Core evidence includes: increasing global data center projects, upward revisions in cloud provider capital expenditures, tight HBM supply, and new wafer capacity not expected to materially come online until after 2028. Samsung Securities predicts memory supply-demand tightness will continue into 2026.

Q: With such strong earnings, why did Samsung's stock price drop sharply?

A: The market had already fully priced in the strong earnings, a classic "buy the rumor, sell the news" phenomenon. Additionally, the market is concerned about the sustainability of AI investment, potential overcapacity, the possibility of tech giants cutting spending, and Samsung's catch-up pressure in the HBM segment.

Q: Has the memory chip price increase trend peaked?

A: It has not yet peaked, but the rate of increase is slowing. TrendForce data shows that in Q3 2026, DRAM contract prices are expected to rise 13% to 18% quarter-on-quarter, and NAND by 10% to 15%. While the increases have significantly narrowed compared to the previous two quarters, the upward trend has not stopped.