The Nvidia logo. [Reuters]
The Nvidia logo. [Reuters]

Shares of Samsung Electronics and SK hynix surged at the open Thursday after Nvidia posted stronger-than-expected earnings and warned that memory chip supply is too tight to keep pace with AI semiconductor production — a signal that AI investment will continue to drive demand and earnings at South Korean memory chipmakers.

Samsung Electronics opened up 3.25 percent at 270,000 won ($195) and SK hynix rose 5.21 percent to 1.776 million won. The gains followed a roughly 4 percent jump in Nvidia's share price in after-hours trading Wednesday (local time), after the chipmaker reported second-quarter results that beat market expectations and projected third-quarter sales above analyst forecasts. Micron, SanDisk and Marvell also rallied about 3 percent each in after-hours trading on the news.

For South Korean chipmakers, the more significant takeaway from Nvidia's results was confirmation that AI investment will continue well beyond the current quarter. Nvidia posted second-quarter sales of $96.22 billion, topping the market consensus of $92.3 billion. Data center revenue reached $89 billion, up 117 percent from a year earlier, and the company's third-quarter sales guidance of $108 billion exceeded the pre-announcement consensus of $104.2 billion.

"Nvidia's results have improved demand visibility for HBM and DRAM and strengthened memory makers' pricing power in negotiations, so investor sentiment toward semiconductors — which had been a source of anxiety for some time — is set to enter a recovery phase," said Han Ji-young, an analyst at Kiwoom Securities.

Nvidia's after-hours share price, which had initially dipped after the market close, rebounded during the earnings call as the company laid out a medium- to long-term growth outlook. Chief Financial Officer Colette Kress said on the call that Nvidia expects its sales growth rate to reach approximately 70 percent in 2028 — well above the mid-40 percent range the market had anticipated. The figure reflects current supply capacity, and actual demand is even higher, meaning growth could accelerate further if additional supply is secured.

The prospect of a prolonged supply shortage at Nvidia is also a positive signal for South Korean memory chipmakers, as expanding AI accelerator production requires a corresponding increase in HBM and other memory supply. "The key variable is that Nvidia's contracted commitments for supply and capacity have surged to $27.9 billion — up 2.3 times from $11.9 billion the previous quarter — and the fact that most of those contracts are memory-related speaks to the current supply situation," said Kim Un-ho, an analyst at IBK Investment Securities.

Some analysts cautioned against reading the results as an unqualified positive, noting that the pace of growth and margin trends also warrant attention. Nvidia's gross margin guidance for the third quarter came in at 74 percent, down from 75 percent in the second quarter. "Nvidia's gross margin is slowing, if only slightly, and while 70 percent sales growth next year would be impressive, it may fall short of the 81 percent average posted over the past four quarters," said Heo Jae-hwan, an analyst at Eugene Investment Securities.

Another variable for Nvidia is whether its AI investment expansion is grounded in genuine end demand. Nvidia has expanded its practice of financing data center buildouts for customers such as OpenAI, who in turn use those facilities to purchase more Nvidia GPUs. Some observers have characterized the arrangement as "circular financing." If AI investment volumes are being inflated by financial support rather than real demand, that could weigh on Nvidia's medium- to long-term growth outlook.

Nvidia pushed back directly on that concern Thursday. The company noted that while OpenAI plans to build roughly 12 GW of Nvidia computing capacity by 2030, Nvidia's own credit support covers only about 2 GW of that total. "We know some will call this circular financing," CFO Kress said on the call. "But we see it differently. Our risk is limited."


kacew@heraldcorp.com