The memory-chip profit cascade just keeps flowing. Samsung Electronics expects a quarterly operating profit of more than $80 billion, in a gush of earnings that should be music to the ears of Micron Technology shareholders.
Samsung said Thursday its estimate is that operating profit for the three months ended September surged nearly ninefold from a year earlier to 107.4 trillion won ($80.18 billion). Although the company doesn't provide segment breakdowns for preliminary results, the driver was almost certainly memory chips.
The Samsung estimate wasn't doing much for memory stocks in the short term. Samsung closed down 2.4% in local trading in South Korea. Micron was down 1.5% in the premarket, after a 4.1% gain the previous day.
Skeptics of the memory trade will argue that such enormous quarterly profit figures just reflect a cyclical peak -- Micron's own blowout earnings last week did little to move the shares. But with memory production only expected to meaningfully increase from 2028, the profit boom is set to continue and that will likely fuel major stock buybacks. Samsung has already guided for 2026 shareholder returns at 90 trillion won to 110 trillion won.
For D.A. Davidson analyst Gil Luria, the time to act is now. He raised his target price on Micron to $3,000 from $2,100 in a research note on Wednesday.
Notably the main driver of Luria's price target -- which is nearly three times higher than current levels -- was ascribing a price-to-earnings multiple of 19 times his forecast for Micron's 2027 earnings. The stock currently trades at a forward PE multiple of 6.1 times according to FactSet.
"Up until now we have limited ourselves to consecutive price targets that were limited to twice the stock price, but that is not where we think shares will trade in a year," Luria wrote. "A company that is well positioned, in an important market, and will grow earnings faster than the market for the next 3-5 years, is likely to trade at least at a market multiple."
Barron's has previously written that Micron and other memory-chip companies might have to endure a downcycle before investors are willing to assign them higher multiples. But if earnings keep booming then there comes a point where they will be too cheap to ignore
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