Samsung Electronics: Strong earnings, stock slides. Is Samsung's rally over?

At the same time, as a key pillar of the South Korean economy, the government, together with SK Hynix and Samsung Electronics, launched three major projects in late June to advance semiconductors, data centers, and physical AI. Samsung also announced an investment plan worth KRW2,450 trillion, most of which will go toward building semiconductor plants in Yongin and Gwangju, South Korea. Despite government support, the scale of this capex plan, combined with concerns over tech giants' AI oversupply, could deepen market worries that these investments may not deliver the expected returns.

Has Samsung's rally come to an end?

The muted stock price and negative industry news may worry some investors that Samsung's rally has ended. In fact, Samsung's investment story is far from over.

First, Meta's sale of computing capacity should be seen as a form of monetization. By renting out spare capacity or part of its AI infrastructure, Meta can generate direct revenue and cash flow from its computing resources to fund other capital investments. As such, news of tech giants selling computing capacity is not directly linked to the end of the memory cycle.

Second, Samsung Electronics tends to sign long-term contracts with customers lasting three to five years, which gives Samsung greater revenue visibility and pricing stability, and reduces the impact of short-term demand swings on earnings. In addition, demand for memory is not driven solely by datacenter and infrastructure construction — the expanding range of AI applications will continue to generate memory demand. As a result, even as concerns over computing-power oversupply persist, Samsung's sales base is unlikely to be shaken.

It is also worth noting that, Samsung's growth momentum does not rely on the memory business alone. As a leading consumer electronics maker, Samsung is actively integrating AI into end products such as smartphones and home appliances, while also identifying "physical AI" as a key growth area. This gives Samsung's revenue base greater diversification, and makes its growth momentum more resilient, reducing its reliance on the performance of any single business segment. At the same time, Samsung's foundry business has also improved as the AI investment cycle continues. As capacity at other traditional foundry companies has become constrained, some chip production demand has begun spilling over to Samsung. Google and AMD are reportedly in talks with Samsung on foundry cooperation, while Tesla signed a long-term agreement with Samsung Electronics late last year for the production of AI5 and AI6 chips. Expanding its share of the foundry market should help improve Samsung's capacity utilization and lift overall revenue for its Device Solutions (DS) division.

Figure 2: 12-Month Forward P/E of KOSPI

In summary, we believe Samsung's stock still has room to grow, and we therefore maintain the KOSPI earnings and fair P/E forecasts from our 2H26 South Korea market outlook. As of July 16, 2026, the potential upside has increased to 60.7%.

Table 2: Valuation and EPS forecast of KOSPI

Figure 3: KOSPI EPS Forecast

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Table 3: Related Products

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.