Samsung 1Q26: HBM4 Progress Beats Expectations; Memory Cycle Remains Key Focus

Overview

This report is Bernstein's company research and earnings review of Samsung Electronics' 1Q26 results. The core conclusion is that while overall 1Q26 results were broadly in line with prior guidance, the quality of the memory business exceeded expectations—particularly the low-90% QoQ growth in DRAM ASPs, leading HBM4 progress, doubled Memory revenue, and elevated DS margins—prompting analysts to maintain the Outperform rating.

Core views

The report highlights three core views. First, the strength of memory price recovery exceeded expectations, with both DRAM and NAND ASPs showing unusually strong upside in 1Q26, and Samsung's DRAM ASP performance outpacing SK hynix and Micron. Second, HBM4 progress is better than model assumptions and may lead peers: shipments to NVIDIA have begun, volume ramp is set for 2H26, and it is expected to contribute over half of HBM revenue starting 3Q26. Third, the supply gap in 2027 may widen as agentic AI drives server memory demand while supply remains constrained, suggesting further room for the memory cycle to continue.

Analysis framework

The report employs a combination of earnings breakdown, product price and shipment tracking, peer comparison, capex monitoring, and valuation frameworks. The earnings section compares actuals against Bernstein estimates and consensus; the product section breaks down DRAM, NAND, and HBM; and the valuation section uses a 2-year forward BVPS multiple combined with historical P/B ranges to assess current valuation fairness.

Methodology notes

• Earnings BreakdownActuals vs. Bernstein Estimates vs. Consensus

  Assessing earnings quality through variances in revenue, gross profit, operating profit, net income, EPS, and segment OPM.

  1Q26 revenue was KRW 133,900Bn, 21.3% above Bernstein estimates and 1.4% above consensus; operating profit was KRW 57,200Bn, 25.8% above Bernstein estimates, primarily driven by Memory and DS.

• Industry Cycle AnalysisASP and Bit Shipment Dual-Variable Framework

  Explaining memory revenue changes using both price and shipment volume.

  The report emphasizes that 1Q26 revenue growth was primarily driven by ASP upside, while 2Q26 bit growth guidance remains moderate, indicating that pricing is the core source of near-term earnings resilience amid supply constraints.

• Peer ComparisonSamsung vs. SK hynix vs. Micron

  Comparing DRAM and NAND ASPs, bit shipments, and revenue elasticity.

  Samsung's 1Q26 DRAM ASP grew in the low-90% QoQ range, exceeding the mid-60% range for SK hynix and Micron; this explains Samsung's relatively outstanding DRAM revenue growth.

• Valuation methods2-Year Forward BVPS Multiple Method

  Deriving target prices by applying a P/B multiple to 2-year forward book value per share.

  Bernstein values Samsung Electronics at 1.6x 2-year forward BVPS, resulting in a common share target price of KRW 225,000, a preferred share target price of KRW 191,250, and a US ADR target price of US$3,888.

Asset mapping & comparison

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

• 005930.KS

  Primary subject; Samsung Electronics common shares.

  Strengths

  Better-than-expected DRAM ASPs, leading HBM4 progress, strong Memory revenue, record-high DS OPM, and widening 2027 supply gap driven by AI server demand.

  Weaknesses

  Target price of KRW 225,000 is slightly below closing price of KRW 226,500, limiting near-term valuation upside; mobile and PC shipments expected to decline significantly this year, especially in 2H26.

  Comparison

  1Q26 DRAM ASP growth stronger than SK hynix and Micron; valuation based on 1.6x 2-year forward BVPS.

  Risks

  Premature end to favorable pricing environment, weakening demand, increased supply, investor sentiment shifts and valuation compression, and downside risks from China's memory industry progress, particularly in NAND.

• 005935.KS

  Samsung Electronics preferred shares, also covered.

  Strengths

  Shares fundamental benefits from Samsung's memory cycle and HBM4 progress with common shares; target price KRW 191,250.

  Weaknesses

  Preferred share liquidity and discount/premium may differ from common shares; report's fundamental discussion focuses mainly on the consolidated company.

  Comparison

  Ticker table shows rating O, closing price KRW 163,500, target price KRW 191,250.

  Risks

  Similarly exposed to memory pricing cycles, valuation sentiment, and Chinese memory competition risks.

• SMSN.LI

  Samsung Electronics US ADR, also covered.

  Strengths

  Provides USD-denominated exposure to same Samsung fundamentals; target price US$3,888.

  Weaknesses

  Subject to FX and ADR trading factors.

  Comparison

  Ticker table shows rating O, closing price US$3,756, target price US$3,888.

  Risks

  In addition to company-specific fundamental risks, also exposed to foreign exchange volatility.

• 000660.KS

  Peer comparison; SK hynix.

  Strengths

  Also benefits from DRAM/HBM upcycle; valued at 1.5x 2-year forward BVPS in report, target price KRW 1,150,000.

  Weaknesses

  1Q26 DRAM ASP growth in mid-60% range, lower than Samsung's low-90% range.

  Comparison

  Used as DRAM, NAND, and HBM cycle peer for comparing ASPs, bit shipments, and valuations.

  Risks

  Similarly faces risks of premature end to favorable pricing, supply-demand reversal, valuation sentiment shifts, and Chinese memory progress.

• MU

  Peer comparison; Micron Technology Inc.

  Strengths

  Benefits from global memory upcycle; Bernstein target price US$510.

  Weaknesses

  1Q26 DRAM ASP growth in mid-60% range, lower than Samsung; report notes MU estimates use Adjusted EPS and valuation uses Adjusted P/E.

  Comparison

  Report values Micron at 2x 2-year forward BVPS and compares with Samsung and SK hynix in DRAM/NAND charts.

  Risks

  Similarly faces risks of premature end to memory pricing environment, weakening demand, increased supply, and investor sentiment shifts.

Key data

• Common Share RatingOutperformBernstein maintains Outperform rating on Samsung Electronics.
• Common Share Target PriceKRW 225,000Based on 1.6x 2-year forward BVPS.
• Common Share Closing PriceKRW 226,500Closing date is 2026-04-29.
• Implied Upside/Downside(1)%Target price is slightly below closing price, but report still highlights positive fundamental progress.
• 1Q26 RevenueKRW 133,900BnYoY or QoQ tables show QoQ at 42.7%, 21.3% above Bernstein estimates.
• 1Q26 Operating ProfitKRW 57,200Bn25.8% above Bernstein estimates, 1.3% above consensus.
• 1Q26 EPSKRW 7,12342.4% above Bernstein estimates, 2.3% above consensus.
• 1Q26 Memory RevenueKRW 74.8TUp 101.6% QoQ, 18.1% above Bernstein estimates.
• 1Q26 DS OPM65.7%5.8ppt above Bernstein estimates, 7.6ppt above consensus.
• 1Q26 DRAM ASP+Low 90s% QoQSignificantly above Bernstein expectations and stronger than peers.
• 1Q26 NAND ASP+High 80s% QoQNAND pricing also showed strong upside.
• HBM4 Progress>50% of HBM Revenue from 3Q26Company guided HBM4 to account for approx. half of FY2026 HBM sales; shipments to NVIDIA have begun.
• F26E Revenue571,178*Table footnote indicates values are in billions.
• F27E Revenue686,889*Revenue CAGR from F25A to F27E is 43.5%.
• F26E P/E6.3xCommon Share Reported P/E.
• F27E P/B1.6xCommon share valuation metric, close to target P/B.

Impact & implications

The report's investment implications are positive: rising memory prices, increasing HBM4 share, and a widening supply gap in 2027 support earnings upgrades and cycle continuation; however, the current common share price is near the target price, limiting immediate valuation upside. If HBM4 ramps up, the margin gap between HBM and legacy DRAM narrows, and AI server demand remains strong, Samsung's earnings and market expectations could continue to be supported.

Risks

• Favorable memory pricing environment may end prematurely due to weaker-than-expected demand or higher-than-expected supply.
• Shifts in investor sentiment could compress valuation multiples, affecting target price realization.
• China's progress in memory, particularly NAND, poses downside risks.
• Mobile and PC shipments are expected to decline significantly this year, especially in 2H26, potentially offsetting some high-end demand and ASP gains.
• Significant capex increases could lead to late-cycle supply expansion, cash flow pressure, or return uncertainty.
• If HBM4 ramp-up, customer qualification, price premiums, or margin convergence fall short of expectations, the report's positive thesis would be weakened.

What to watch

• Pace of HBM4 ramp in 2H26 and whether it contributes >50% of HBM revenue from 3Q26 as guided.
• Customer feedback following HBM4E sampling in 2Q26, 16Gb/s/pin speed performance, and subsequent mass production timeline.
• Whether agentic AI accelerates general-purpose server memory demand in 2H26, extending the supply gap into 2027.
• Whether DRAM and NAND ASPs remain strong in 2Q26 and beyond, particularly sustainability after low-90% QoQ DRAM growth.
• Whether moderate 2Q26 bit shipment guidance reflects genuine supply constraints or subsequent demand slowdown.
• Ability of Memory and DS segment margins to sustain highs, and whether margin gap between HBM and legacy DRAM narrows significantly.
• Progress on Samsung's new shareholder return policy, M&A plans, and potential growth areas such as robotics.
• Execution pace of capex related to Pyeongtaek infrastructure, Taylor fab, memory equipment, and R&D.