Samsung Electronics Q2 Results Beat Expectations, Memory as the Core Highlight

Overview

This report is Nomura's quick commentary on Samsung Electronics' preliminary 2Q26 results. Its core conclusion is that Q2 results significantly beat expectations, mainly driven by the memory business; display segment revenue grew but margins remain pressured; Foundry/LSI and MX remain profit drags. Nomura maintains a Buy rating and KRW670,000 target price.

Core views

Nomura believes Samsung Electronics' Q2 operating profit reached KRW89tn, above its KRW76tn estimate, and that operating performance is even stronger after removing the impact of bonus provisions. Memory price dispersion and ongoing supply tightness continue to drive profit outperformance, with commodity DRAM/NAND prices in 3Q26 likely rising 15%-20% sequentially, and HBM profitability expected to gradually converge toward commodity DRAM levels. Although smartphone and foundry-related businesses are under short-term pressure, the company’s overall profit scale is still not fully reflected compared with peers.

Analysis framework

The report combines a quick earnings review, segment-level profit decomposition, memory-cycle pricing assessment, and relative valuation: first comparing preliminary 2Q26 results with Nomura forecasts, then analyzing margin drivers by memory, Foundry/LSI, Display, and MX, and finally deriving the 12-month target price using a target P/B multiple.

Methodology notes

• Valuation methodsTarget P/B Method

  12-month target price

  Nomura's 12-month target price of KRW670,000 is based on a 5.0x target P/B multiple multiplied by 12-month forward BVPS of KRW133,139, and the target multiple reflects improved business stability and visibility from long-term memory contracts.

• Rating FrameworkRelative Rating Framework

  Buy rating

  Nomura's Buy rating means the analyst expects the stock to outperform its stated benchmark over the coming 12 months; the benchmark for this report is KOSPI200.

Asset mapping & comparison

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

• Samsung Electronics (005930.KS)

  Research target; Korean technology and semiconductor leader

  Strengths

  Memory business significantly outperformed expectations, with quarterly profit scale at a leading level among global technology companies; memory supply tightness and long-term contracts improve profit visibility.

  Weaknesses

  Foundry/LSI remains loss-making, MX turned unprofitable due to the lagged impact of rising memory costs, and Display margins are under pressure from declining prices.

  Comparison

  Nomura believes Samsung Electronics has higher quarterly profit scale than peers with similar market capitalization, and is unfairly undervalued when measured by profit scale.

  Risks

  U.S. semiconductor tariffs, delays in data center construction due to electricity shortages, and slower AI capex under a high-rate environment.

• Memory supply chain

  Core profit driver and cyclical variable

  Strengths

  Commodity DRAM/NAND prices are expected to continue rising in 3Q26, and HBM profitability is expected to converge toward commodity DRAM.

  Weaknesses

  Rapid price increases may raise downstream costs and create lagged margin pressure on businesses such as MX.

  Comparison

  The report emphasizes that price dispersion among memory suppliers is deepening, with Samsung Electronics' memory performance exceeding Nomura's expectations.

  Risks

  If capacity expansions outpace expectations, demand weakens, or AI capex cools, the memory price upswing and supply-tightness thesis may be impaired.

Key data

• Preliminary 2Q26 revenueKRW171tnSource is from report body OCR text.
• Preliminary 2Q26 operating profitKRW89tnAbove Nomura's prior estimate of KRW76tn.
• Estimated 2Q26 operating profit excluding bonus provisionsaround KRW110tnThe report states that Q1 and Q2 bonus provisions of around KRW20tn were both included in the Q2 statement.
• Forecast commodity DRAM/NAND price in 3Q26Sequential increase of 15%-20%Nomura expects memory price momentum to gradually stabilize thereafter.
• Target price and closeTarget KRW670,000; close KRW318,000Close date is 2026-07-06.
• Valuation assumptions5.0x target P/B; 12-month forward BVPS KRW133,139Used to derive the 12-month target price.

Impact & implications

If Nomura's thesis is correct, Samsung Electronics' near-to-medium-term investment thesis remains driven by upward memory cycle momentum, supply tightness, and improving HBM profitability; at the same time, ongoing profit pressure in non-memory businesses means the market needs to continue to verify whether the company can pass memory cost pressure through to end prices. The implied upside versus the current stock price is substantial, and the report is broadly constructive.

Risks

• The U.S. may impose additional tariffs on semiconductor products.
• Data center construction may be delayed due to power supply shortages.
• AI capital expenditure may slow in a high-interest-rate environment.
• Continued memory price increases may further squeeze margins in terminal businesses such as MX.
• The pace of improvement in Foundry/LSI losses may be slower than expected.

What to watch

• Whether 3Q26 commodity DRAM/NAND prices achieve a sequential increase of 15%-20%.
• Whether HBM prices and profitability continue to converge toward commodity DRAM.
• Whether Samsung Electronics raises smartphone prices further in H2 to pass through costs.
• The pace at which long-term memory contracts expand and their impact on profit stability.
• Whether supply tightness is still not alleviated by new capacity additions before 2029.