Third-quarter sales reach 195 trillion won with an operating profit of 107.4 trillion won; marking a record-breaking performance for four consecutive quarters.
Heightened stock price volatility on earnings day exacerbated by foreign sell-offs, ETF rebalancing, and options expiration.
Samsung Electronics (005930) has ushered in a new era for South Korean corporate history, reporting an operating profit of 107.4 trillion won for the third quarter of this year—the first time a domestic firm has cleared the 100 trillion won mark in a single quarter. With sales reaching 195 trillion won, the company has now set record highs in both revenue and operating profit for four consecutive quarters, starting from Q4 of last year.
While surging semiconductor demand driven by expanded artificial intelligence (AI) investment has fueled these results, the stock market is currently contending with significant short-term supply-demand pressures, including foreign divestment and index rebalancing for exchange-traded funds (ETFs).
First-Ever 100 Trillion Won Quarterly Profit: 2.5 Times Last Year's Total Annual Earnings
Samsung Electronics' preliminary consolidated financial results for the third quarter show sales of 195 trillion won and an operating profit of 107.4 trillion won. These figures represent year-on-year increases of 126.59% and 782.50%, respectively. Compared to the previous quarter, sales grew by 13.70% and operating profit by 20.01%.
Remarkably, the profit generated over these three months is approximately 2.5 times the 43.6 trillion won Samsung earned in total for the entire previous year. Less than a year after exceeding 90 trillion won in sales and 20 trillion won in operating profit for the first time in Q4 last year, the company has nearly reached 200 trillion won in quarterly sales and shattered the 100 trillion won profit ceiling.
Profitability also saw a significant boost, with an operating margin of 55.1%, up from the previous quarter. According to SK Securities analysts Han Dong-hee and Son Geon, while revenue fell 2.8% short of the 201 trillion won market consensus, the operating profit beat the estimate of 107 trillion won by 0.7%, with the operating margin exceeding market expectations by 1.9 percentage points.
Analysts attribute this performance to rising DRAM prices and expanded demand for AI server memory, including High Bandwidth Memory (HBM). However, as preliminary results do not break down performance by business unit, the exact profit contribution of the Device Solutions (DS) division—which oversees the semiconductor business—will be confirmed in the final earnings disclosure.
With cumulative sales of 500.37 trillion won and an operating profit of 254.13 trillion won for the first three quarters of the year, Samsung is well-positioned to set new annual records depending on its fourth-quarter performance.
Foreign Selling Pulls KOSPI Back to 6800 Level; Shares Weaken Despite Earnings Beat
Despite the robust earnings, domestic equities have been plagued by a persistent foreign sell-off. On the 7th, one day before the earnings release, the KOSPI index closed at 6,803.90, down 1.98% from the previous session.
Foreign investors net sold over 2.6 trillion won worth of shares on the KOSPI market that day. Samsung Electronics and SK hynix fell 1.29% and 2.82%, respectively, dragging down the broader index.
Foreign divestment from Samsung Electronics has been particularly pronounced. According to Goldman Sachs, foreign investors net sold approximately $2.6 billion worth of Samsung stock over the past five trading sessions. Market observers interpret this as profit-taking and portfolio adjustments, despite the optimistic outlook for the semiconductor cycle.
Samsung Electronics saw its share price dip as low as 267,000 won in early trading on the 8th. Even on the day of the record-breaking announcement, the stock remained weak due to continued foreign and program-led selling. However, given that market sentiment can shift intraday, it is premature to characterize short-term price movements as a definitive judgment on the company’s performance.
Rising U.S. Treasury yields are also weighing on investor sentiment. The 10-year U.S. Treasury yield briefly surpassed 5.36% during the overnight session before paring gains. Samsung’s stock performance today is being influenced by both external yield pressures and impending large-scale supply-demand adjustments within the domestic market.
19 Trillion Won Semiconductor ETF Rebalancing: Estimated 200 Billion Won Sell-off for Samsung
On the 8th, the day of the earnings release, seven semiconductor ETFs worth approximately 19 trillion won are undergoing periodic rebalancing. Some funds are expected to trigger sell orders to bring their holdings in Samsung Electronics back within the regulatory 25% cap, as its current weighting has exceeded this threshold.
Notably, the TIGER Semiconductor TOP10 ETF saw its stake in Samsung Electronics reach 27.1% as of the 29th of last month, exceeding the 25% limit. Samsung Securities estimates that roughly 200 billion won in Samsung Electronics stock could be sold off during this rebalancing process.
Conversely, the firm estimates potential buy demand of approximately 90 billion won for SK hynix and 80 billion won for SK Square. This suggests that rather than a total outflow from the semiconductor sector, capital is merely circulating within the ETFs due to portfolio weight adjustments.
Goldman Sachs warned in a report on the 6th of potential volatility in Samsung’s share price on the 8th, citing the convergence of mechanical selling from ETF rebalancing, options expiration, and the completion of the company’s share buyback program.
Samsung’s 15 trillion won share buyback is nearing its conclusion; as of the 6th, 97% of the program had been executed, signaling a likely decline in the share buyback demand that has recently supported the stock price.
However, not all estimated sell-offs from ETF rebalancing will necessarily hit the market as actual trades. As individual weight adjustments, along with foreign and institutional trading, occur simultaneously, the final impact on the share price will depend on intraday supply-demand dynamics.
With these results, Samsung Electronics has reaffirmed the improvement in the semiconductor cycle and its enhanced profitability. The market is now focused on when the foreign sell-off will stabilize and the direction of capital flows following the ETF rebalancing. Whether buying interest in large-cap semiconductor stocks persists after these short-term pressures subside will serve as a key barometer for the future trajectory of the KOSPI.
