Samsung Electronics: What We Think of the Stock After Earnings

Key Morningstar Metrics for Samsung Electronics

• Fair Value Estimate
  : KRW 310,000
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Very High

What We Thought of Samsung Electronics’ Earnings

Samsung Electronics 005930′ September-quarter revenue and operating margin rose 14% and 280 basis points, respectively, to KRW 195 trillion and 55%. Shares fell 5% after the company’s earnings call.

Why it matters: Samsung hinted at gains in its HBM market share, echoing our prior view of its improving HBM expertise. The company’s near-term outlook has improved, driven by stronger HBM prices, but we see rising long-term cyclicality risks.

• Samsung’s comments imply an HBM market share of roughly 32%, in line with our 30% estimate for 2026. Coupled with HBM4’s 50% price premium to HBM3E and 2027 HBM negotiations indicating prices doubling, we expect stronger near-term HBM revenue from Samsung.
• Our 2028 cycle peak view is reinforced. China presents a growing risk of memory oversupply and commoditization, given strong technological advancements by CXMT and YMTC alongside state-backed expansion.

The bottom line: We keep our fair value estimate for Samsung Electronics of KRW 310,000 but raise our fair value for GDRs to $5,798 on a stronger Korean won. While we remain wary of longer-term cyclicality, shares remain undervalued both against our fair value estimate and relative to US peers.

• Shares likely fell on Samsung’s view of a memory shortage till 2029 versus SK Hynix’s bullish 2030 forecast. That said, we see no change in the companies’ competitive position and view this as management conservatism.
• We raise our 2027 and 2028 revenue and operating margins by 12%-17% and 530-750 basis points, respectively, on stronger near-term HBM pricing, but lower our midcycle operating margin by 197 basis points on rising oversupply risk from Chinese entrants.

Coming up: Foundry’s advanced nodes are now fully utilized, driven by HBM4 base die production and recent contract wins. We now see Foundry breaking even by the end of 2026, as we expect overall utilization rates and product mix to further improve from its Taylor fab ramp-up.