Samsung Electronics delivered a sharply better-than-expected 1Q result, with memory price increases and 2027 visibility becoming key to valuation re-rating

Overview

This is a JPMorgan earnings review on Samsung Electronics. The report focuses on the company's strong preliminary 1Q26 results, rising memory prices, room for 2026 EPS upgrades, and visibility into 2027 demand and profitability. JPMorgan maintains an Overweight rating and believes Samsung Electronics is at an inflection point between de-rating and valuation multiple normalization; if visibility on 2027 demand, HBM, and DRAM/NAND shipments improves, market confidence in earnings sustainability could recover.

Core views

The core view is that Samsung Electronics' 1Q26 results significantly beat expectations, mainly supported by strong DRAM and NAND pricing, tighter-than-expected memory supply, a higher share of server-grade memory, and better-than-feared performance in the Set business. JPMorgan expects DRAM and NAND ASPs to rise by more than 30% again in 2Q26; price increases may moderate in the second half of 2026, but product-mix improvement and more than 20% volume growth could support further price increases in 2027. The report argues that the medium- to long-term memory supply-demand balance remains tight and could persist for more than 24 months, with JPMorgan forecasting the cycle could extend through 1H28E.

Analysis framework

The report combines an earnings review, industry supply-demand analysis, and a valuation framework: it first compares the gap between the company's preliminary 1Q26 sales and operating profit and JPMorgan's forecast and market expectations, then breaks down changes in memory ASPs, bit growth, capacity constraints, product mix, and business margins, and finally uses FY26E-27E P/B valuation to explain the W300,000 target price while assessing subsequent catalysts through 2027 demand visibility, long-term agreements, HBM qualification, and AI-related memory demand.

Methodology notes

• Valuation methodsPB valuation

  Target price based on 2.2x FY26E-27E P/B

  JPMorgan sets the Dec-26 target price of W300,000 based on 2.2x FY26E-27E price-to-book, above the prior cycle peak of 1.9x, to reflect a multi-year memory upcycle, improving foundry order momentum, and the possibility of ROE rising into the mid-to-high 30% range over the next two years.

• Industry CycleMemory supply-demand cycle analysis

  Tight supply-demand and ASP upside

  The report assesses earnings sustainability through the supply-demand balance, ASPs, bit growth, and procurement fulfillment rates for DRAM, NAND, HBM, and server-grade memory, and concludes that the tight memory supply-demand backdrop could last for more than 24 months.

• Event CatalystEarnings call and long-term agreement tracking

  2027 demand and LTA terms visibility

  The report says that updates during the 1Q26 earnings call on 2027 demand, memory content growth, DRAM/NAND shipments, HBM progress, and the tenor, terms, and floor prices of LTAs will affect investor confidence in earnings sustainability.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Samsung Electronics (005930.KS)

  The subject of the research; JPMorgan maintains an Overweight rating

  Strengths

  1Q26 results were far better than expected, DRAM and NAND price increases were strong, memory supply-demand was tight, HBM progress improved, and ROE may rise significantly.

  Weaknesses

  There is still insufficient evidence that the HBM technological moat has fully recovered, the share price may not yet fully reflect EPS upgrades, and investors still question earnings sustainability.

  Comparison

  Up 63% year to date, below memory peers at +82% but above the KOSPI at +30%; currently at an inflection point between de-rating and valuation multiple normalization.

  Risks

  A prolonged memory price downcycle, weaker-than-expected HBM demand from ASIC customers, delays in qualification for future HBM generations, and slower-than-expected mobile device shipment growth.

• DRAM/NAND/HBM memory chain

  The core driver of Samsung Electronics' earnings and valuation

  Strengths

  Memory shortages, a higher share of server-grade products, and rising HBM and AI-related demand support pricing and margins.

  Weaknesses

  Peak pricing concerns, a disconnect between CSP capex and memory price expectations, and LTA constraints on further price increases may weigh on market confidence.

  Comparison

  The report believes investors may be underestimating the duration of the memory upcycle, and related stocks are already trading at 2-5x FY27E P/E.

  Risks

  If there is no clear evidence on 2027 demand, shipments, and long-term agreements, valuation re-rating may be delayed.

Key data

• Preliminary 1Q26 salesW133tnThe report says this was clearly above JPMorgan's forecast, consensus estimates, and the high end of sell-side expectations.
• Preliminary 1Q26 operating profitW57.2tnA quarterly record, mainly driven by strong memory pricing.
• Current priceW195,500As of April 7, 2026.
• Target priceW300,000Dec-26 target price.
• Implied upsideabout 53.5%Calculated using the W300,000 target price and W195,500 current price.
• Combined DRAM and NAND ASP qoq changeapproximately +75%-85%Above JPMorgan's prior forecast of +60%-65%.
• 2Q26 DRAM and NAND ASP expectationboth to rise by more than 30% furtherBecause memory supply fulfillment rates are low, meeting only about 65% of procurement demand.
• Stock performance year to date+63%Compared with memory peers at +82% and the KOSPI at +30%.
• Valuation benchmark2.2x FY26E-27E P/BUsed to derive the W300,000 target price.
• Expected ROEmid-to-high 30% range over the next two yearsThe report believes this supports a valuation premium above the prior cycle peak.

Impact & implications

The report is constructive from an investment perspective: in the near term, the share price may trade in a range as investors wait for evidence on 2027 demand; in the medium term, if memory price increases, HBM progress, server-grade demand, and long-term agreement visibility are realized, Samsung Electronics could shift from an EPS-upgrade-but-multiple-compression phase toward valuation multiple normalization. The report also emphasizes that the positive correlation between AI/token demand and constrained memory supply is an important reason why the memory upcycle may last longer.

Risks

• A prolonged memory price downcycle.
• HBM demand from ASIC customers in FY25-26 coming in below expectations.
• Delays in qualification for future HBM generations.
• Slower-than-expected mobile device shipment growth.
• A disconnect between CSP capex and memory price forecasts could undermine market confidence in demand.
• Concerns that spot prices have peaked and LTA terms may limit further price upside.
• Geopolitical risks related to upstream semiconductor material supply.
• Potential impact from labor strike developments on operational stability.

What to watch

• The company is scheduled to release full earnings details in the Asia morning on April 30.
• Updates during the 1Q26 earnings call on 2027 demand, shipments, and memory content growth.
• Visibility into 2027 demand for HBM, DRAM, and NAND.
• Progress in official discussions on LTA tenor, terms, and floor prices.
• Whether DRAM and NAND can achieve more than 30% ASP increases in 2Q26.
• HBM qualification progress and whether Samsung can restore evidence of technological leadership.
• The impact of AI/token demand, the CSP business model, and revenue momentum on memory consumption.
• Upstream semiconductor material supply, labor strikes, and changes in KV cache-related SSD demand.