Samsung Electronics: Guidance in Line; Tight Supply-Demand to Drive Memory Price Rebound

Narrow-moat Samsung Electronics’ preliminary numbers for the September quarter were slightly below our July forecasts, which we believe was due to the weaker memory price and capacity utilization assumptions, but were largely in line with what we expected from Micron Technology’s August-quarter earnings results reported in late September. As a result, we maintain our view that memory prices will rise in 2024 due to the tight supply-demand as memory suppliers will remain disciplined in reducing excess inventory in the supply chain. We believe Samsung’s stock is undervalued, and favorable memory prices and news flow on generative AI server investments could drive the stock price in the near term.