Samsung is only about 14% away from the $1 trillion market capitalization milestone, a leap driven by fundamental earnings rather than mere market sentiment. The structural disruption of memory demand by AI is reshaping the industry's supply and demand dynamics, and the DRAM pricing upcycle is expected to continue until 2027, with the ongoing improvement in HBM (High Bandwidth Memory) market share catalyzing the largest profit recovery in history.
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According to the Wind Trading Desk, Morgan Stanley released its latest research report &#34;Samsung - Sprinting to $1 Trillion&#34; on February 24, 2026, listing Samsung Electronics as a Top Pick with an &#34;Overweight&#34; rating, and raised the stock price target from 210,000 KRW to 248,000 KRW, indicating a 24% upside from the current stock price.
Samsung's move towards $1 trillion is not merely a cyclical sentiment rebound, but a structural improvement in profitability. Morgan Stanley's logic is that the pricing power of memory and sustained AI-driven investments are laying the foundation for continuous EPS upgrades; the durability of the DRAM cycle is underestimated by the market, and once re-priced, it will unlock higher valuation multiples.
In terms of valuation framework, the report uses the intrinsic value method to calculate the conditions for achieving a $1 trillion market capitalization: an annual revenue growth rate of 11%, an operating profit margin of 35%, and an ROE close to 13%. AI infrastructure spending is expected to expand at a compound annual growth rate of 40% to 45% over the next five years, and Samsung's actual growth is expected to significantly exceed these conditions.
Historically, members of the trillion-dollar club (including Apple, Microsoft, etc.) tend to continue outperforming the market after reaching this market capitalization milestone, with the core driver being the continuous upward revision of profit forecasts. Morgan Stanley points out that focusing on earnings and valuation, rather than just market capitalization size, is a more meaningful investment perspective.
Morgan Stanley predicts that Samsung's profits will surpass most of the &#34;Magnificent Seven&#34; (Mag 7) companies by 2027, and ample cash flow will provide solid support for buybacks, dividends, and strategic acquisitions.
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<h2>Financial Path: Reverse Deriving the Profit Threshold Needed for $1 Trillion</h2>
Morgan Stanley has constructed a reverse derivation model to quantify the financial threshold required for Samsung to achieve a $1 trillion market capitalization. Based on the historical assumption that investors pay a 10x price-to-earnings ratio for Samsung, the company needs to generate approximately $100 billion in net profit. If we reverse this with a 25% tax rate, Samsung needs to achieve about $133 billion in operating profit.
Assuming a 45% operating profit margin, it needs to achieve approximately $347 billion in annual revenue. Morgan Stanley's revenue forecast has already surpassed this threshold: the forecast for 2026 is $398.4 billion, and for 2027 it reaches $484 billion.
From the perspective of the price-to-book ratio (P/B), this logic can also be confirmed. If we estimate Samsung's market value at 2 times the projected book value for 2027, it will easily exceed $1 trillion, reaching approximately $1.7 trillion.
It is worth noting that when Samsung previously reached a P/B of 2, the corresponding peak ROE was 23% in 2020, while Morgan Stanley predicts that the ROE will double to 46% by the end of 2026, indicating that the current valuation is significantly undervalued relative to the fundamentals.
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<h2>The AI Wave Disrupts Storage Logic: Structural Changes in Supply and Demand Patterns</h2>
The explosive growth of AI is fundamentally reshaping the supply and demand relationship in the memory industry. AI computations not only require a large number of GPUs to generate data but also need massive memory to store training data and perform inference. The previous commodity memory cycle logic has been broken, and there are no signs that it will return to the old model in the short term.
The role of memory in AI computing architecture is rapidly shifting to a core position. Supply has significant inelastic characteristics while facing an accelerating wave of Agentic AI demand. Memory component suppliers are quickly evolving into memory solution providers, and this transformation will bring lasting bargaining power and margin improvement.
Morgan Stanley's data shows that the annualized revenue scale related to AI will exceed $200 billion in the next 12 months:
This includes approximately $30 billion in quarterly revenue from Nvidia, AMD's data center business doubling to about $10 billion per quarter, Broadcom's semiconductor business doubling to about $25 billion per quarter, and Marvell and Intel contributing approximately $1 billion in incremental revenue.
The existing memory capacity cannot meet this demand wave at all.
<h2>Pricing Upward: DRAM Prices Exceed Expectations, Significant Room for EPS Upgrades</h2>
Recent pricing dynamics have far exceeded market expectations. The spot price of 64GB RDIMM server DRAM has surged significantly since the contract price was set in the first quarter of 2026, nearly 100% higher than the contract price, with every end market facing an increasingly severe shortage. This means that even if the mainstream contract price doubles, it will still be more than 20% lower than the spot price.
Morgan Stanley has raised its DRAM pricing forecast for the second quarter of 2026 from +20% to +40%. Even if some price increases cannot be fully converted into actual average prices, a 50% quarter-on-quarter increase remains a conservative lower limit.
Current market consensus predicts that Samsung's EPS will peak at approximately 8,817 Korean won per share in the third quarter of 2027, which can be achieved with a year-on-year increase of about 20%-25% based on the price in the second quarter of 2026. This means that **Samsung's actual EPS may continue to exceed consensus expectations in the next year and a half
**
Under the current scenario with an EPS forecast of 40,778 KRW per share, the price-to-earnings ratio in 2027 is only about 5.6 times. Even without considering the expansion of valuation multiples, simply switching the valuation benchmark from the peak in 2026 to the peak in 2027 will also bring about a significant stock price revaluation effect.
At the same time, Samsung's cash generation capability of approximately $30 billion per quarter means that it can generate free cash flow equivalent to about 10% of its current enterprise value within a year.
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<h2>Supply Bottleneck: Severe Shortage Will Persist Throughout 2026</h2>
Supply growth in 2026 will not effectively alleviate the supply shortage. The DRAM bit shipments of Samsung and SK Hynix are expected to show flat or low single-digit growth in the first quarter of 2026; in terms of NAND, Samsung recorded only a 5% growth from a low base, while Hynix experienced negative growth.
Morgan Stanley estimates that by the end of 2026, the year-on-year growth in DRAM wafer shipments from Samsung and Hynix combined will be only about 7%, and the new capacity from Changxin Storage (CXMT), Hynix M15X, and Samsung P4L will not be able to fill the gap in the short term; Micron's factory in Boise and its collaboration with Taiwan's Nanya Technology will also not see capacity improvements until 2027.
The structural capacity gap makes it difficult to reverse the supply-demand imbalance in the short term. There is almost no buffer of producer inventory on the balance sheet, and the most important customers are competing for supplies at premiums above market contract prices, even willing to pay extra for a 30-day advance on supply.
<h2>Characteristics of the Trillion-Dollar Club: Continuously Creating Excess Returns</h2>
The common characteristics of global trillion-dollar technology companies include: market dominance in high-growth industries, enduring competitive moats, high profitability (gross margins generally exceeding 60%), global scale, and strong investor confidence.
Samsung falls into the category of &#34;consumer technology giants,&#34; with global consumer coverage, a strong brand, and diversified monetization models (semiconductors, hardware, services).
In terms of R&amp;D investment, Samsung's R&amp;D expenditure exceeded $28 billion last year, far surpassing its closest semiconductor peers—NVIDIA at about $13 billion, TSMC at about $7 billion, and Micron at about $4 billion, demonstrating its sustained investment capability and providing a foundation for building a long-term technological moat.
Historically in the capital markets, over the past decade, funds focused on large-cap stocks have achieved a return rate exceeding 380%, far surpassing the S&amp;P 500 index's return rate of 225% during the same period. Thus, giant companies with the aforementioned core characteristics can create sustained excess returns.
<h2>Trillion-Dollar Threshold: Fundamental Logic Behind the Psychological Milestone</h2>
Samsung's current market value is approximately $927 billion, just about 14% away from the $1 trillion mark. There are only a handful of companies globally with a market value of $1 trillion—historically, fewer than 10 have reached this milestone, and even fewer can maintain it
Morgan Stanley emphasizes that a trillion-dollar market capitalization is essentially a psychological milestone, sending a strong signal of investor confidence to the market, but it does not directly equate to a fundamental value shift.
Its significance lies in its ability to attract incremental investors who previously missed the stock price rise and to prompt existing holders to reassess the value return of their holdings.
More importantly, a trillion-dollar market capitalization can create a positive reinforcement cycle of pricing through the automatic allocation mechanisms of passive funds such as ETFs. For Samsung, the current valuation remains at &#34;value stock&#34; levels, showing no valuation bubble compared to other trillion-dollar companies, but rather significant upside potential.
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<h2>Sustainability: Three Structural Growth Vectors</h2>
Morgan Stanley believes that Samsung has a credible path to achieve and sustain a market capitalization exceeding one trillion dollars, based not on cyclical recovery but on structural participation across multiple platforms, concentrated in three growth vectors.
First, AI infrastructure. Memory has become an indispensable foundational component of AI computing, and Samsung, with its advantages in HBM technology and leading foundry capabilities, is positioned at multiple key capture points in the value chain.
Second, physical AI (Samsung humanoid robots, from digital AI to physical AI). Computing demands are extending from the digital world to the physical world, with the semiconductor content density and performance requirements of each device continuing to rise.
Third, ubiquitous edge connectivity. As connectivity and automation scale expand, Samsung's layout in core components such as image sensors and OLED display panels will continue to yield returns.
Samsung's existing memory, smartphones, OLED display panels, foundry, and consumer electronics businesses not only provide operational scale but also bring cash flow resilience. This cash flow foundation provides funding for entering higher growth, structurally beneficial new areas while reducing cyclical risks.
<h2>Valuation Adjustment: Target Price Raised to 248,000 KRW</h2>
In terms of specific valuation adjustments, Morgan Stanley has raised its profit margin assumption for Samsung's HBM to align with SK Hynix (previously given a discount), reflecting Samsung's significant progress in HBM4 execution, market share competition, and pricing strategy.
The core support comes from Samsung's vertically integrated HBM manufacturing structure, particularly its ability to manufacture HBM base chips using its own leading foundry capabilities, which strengthens its technological competitiveness, cost advantages, and profit margin resilience.
At the same time, the profit margin assumptions for commodity DRAM and NAND have been raised accordingly, primarily driven by stronger-than-expected pricing in the second quarter of 2026 (DRAM raised from +20% to +40%) and the judgment that pricing will remain structurally high for a longer period.
EPS forecast changes are: 23% increase for 2026, 16% increase for 2027, and 9% decrease for 2028 (assuming large-scale wafer capacity increases from 2028 will exert downward pressure on storage average prices)
The long-term HBM profit margin assumption has been raised from around 50% to just over 60%. The target price has been adjusted from 210,000 KRW to 248,000 KRW, corresponding to a projected price-to-book ratio of 2.7 times for 2026. The bull market scenario target price is 321,000 KRW (corresponding to a price-to-book ratio of 3.3 times for 2026), while the bear market scenario target price is 102,000 KRW (corresponding to a price-to-book ratio of 1.2 times for 2026, close to historical bottom levels)

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Morgan Stanley raised Samsung's target price to 248,000 won and listed it as a top pick. The super pricing cycle for DRAM is expected to continue until 2027, coupled with a surge in HBM market share, Samsung is experiencing the largest profit recovery in its history. Companies with a market capitalization of one trillion dollars often continue to outperform the market after reaching this milestone. Morgan Stanley predicts that Samsung's profits will surpass most companies in the Mag 7 by 2027

- Samsung is approximately 14% away from reaching a $1 trillion market value, driven by structural profitability improvements rather than market sentiment.  
- Morgan Stanley's report cites that AI-driven demand is restructuring the memory industry, predicting continued rising DRAM prices and a significant profit revival by 2027.  
- The research also highlights strong revenue growth forecasts and sustainable cash flow, supporting share buybacks, dividends, and strategic acquisitions, while revising the stock target price to 248,000 KRW.

Samsung Electronics – Moving Towards the "Trillion Dollar Club"