Does Samsung’s OpenAI Chip Deal Signal More Room for 2025 Share Gains?

Deciding what to do with Samsung Electronics stock right now? You are not alone, and there have rarely been more reasons to pay close attention. The stock has been on a tear, jumping 6.8% just this week and clocking a massive 27.5% gain over the past month. Year-to-date, Samsung shares have soared 66.7%, handily outpacing broader markets and rewarding anyone who looked to ride the momentum. Over the past year, the stock is up 50.3% and has nearly doubled over the last five years with a 69.1% gain.

Much of the excitement traces to headline-making news. Just recently, Samsung inked a deal alongside SK Hynix to supply advanced semiconductors for OpenAI's ambitious Stargate data center project. That kind of major win not only boosts long-term growth expectations, but it also positions Samsung as a pivotal player in the AI hardware race. Meanwhile, competitive pressure is clearly heating up, with major U.S. policy shifts on tariffs and rivalries like Intel and Nvidia shaking up the global chip landscape. Despite legal headwinds earlier in the year, Samsung has been able to put some patent disputes behind it, clearing a path for investors focused on growth stories rather than courtroom drama.

With the stock's recent performance and these blockbuster news catalysts, it's easy to get swept up in the optimism. But how does Samsung Electronics actually stack up on valuation? By our checks, the company is undervalued in 5 out of 6 key measures, earning a value score of 5. This hints at potential that goes beyond headline hype. Next, we'll dive into the valuation methods analysts use to reach these numbers, and later, reveal an often-overlooked approach that paints an even clearer picture of Samsung's true worth.

Samsung Electronics delivered 50.3% returns over the last year. See how this stacks up to the rest of the Tech industry.

Approach 1: Samsung Electronics Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a popular tool that estimates a company's intrinsic value by forecasting its future free cash flows and then discounting those cash flows back to the present using a reasonable discount rate. This approach aims to capture the real economic value of a business based on its ability to generate cash over time.

In Samsung Electronics' case, the most recent reported Free Cash Flow (FCF) is approximately ₩16,201.0 billion. Analysts expect this number to climb substantially, and by 2027 projections suggest FCF will reach around ₩36,288.6 billion. Simply Wall St extrapolates that figure even further, showing steady increases in free cash generation through 2035. These forward-looking projections highlight robust growth potential as Samsung continues to invest in technology and new markets.

Using these forecasts, the DCF model concludes Samsung Electronics' intrinsic value is ₩118,497 per share. Compared to its current share price, this estimate implies the stock is currently trading at a 24.9% discount to its underlying value. This suggests it is significantly undervalued based on its anticipated cash flow generation.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Samsung Electronics.

Our Discounted Cash Flow (DCF) analysis suggests Samsung Electronics is undervalued by 24.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Samsung Electronics Price vs Earnings (P/E Ratio)

The Price-to-Earnings (P/E) ratio is a widely used metric for valuing profitable companies like Samsung Electronics, as it helps investors gauge how much they are paying for each unit of current earnings. Because earnings reflect both profitability and business quality, the P/E ratio is often a go-to benchmark for assessing whether a stock offers good value, especially in established sectors like technology.

A company's "normal" or fair P/E ratio typically depends on how quickly its earnings are expected to grow and the level of risk investors perceive. Higher growth rates or lower risk profiles can justify paying a higher P/E, while slower growth or elevated risks usually call for lower multiples. This context helps ensure comparisons are meaningful rather than misleading.

Samsung Electronics is currently trading at a P/E ratio of 20.7x. In comparison, the average for its tech industry peers is 23.9x, and the peer group used here sits at 21.0x. This places Samsung slightly below both benchmarks, suggesting the market is not pricing in an aggressive premium relative to the sector.

To provide a more tailored assessment, Simply Wall St calculates a proprietary “Fair Ratio” for Samsung at 29.0x. This takes into account not just industry averages or peer groups, but also company-specific factors such as growth outlook, profit margins, market capitalization, and risk profile. Rather than relying solely on direct comparisons, the Fair Ratio offers a more holistic, nuanced estimate of what investors might expect to pay given Samsung’s unique position and prospects.

Comparing the current P/E of 20.7x to the Fair Ratio of 29.0x, Samsung Electronics appears meaningfully undervalued based on its earnings power and outlook.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Samsung Electronics Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple yet powerful story you build about a company, combining your unique perspective, whether bullish or cautious, with your assumptions about its future revenue, earnings, and profit margins.

Narratives don’t just track numbers; they connect Samsung Electronics’s real-world developments to structured financial forecasts and provide a calculated Fair Value. On Simply Wall St’s Community page, you can easily create or join Narratives (millions of investors do) to turn your view of the company’s prospects into an actionable investment case.

The beauty of Narratives lies in their practicality. They help you decide when to buy or sell by comparing your Fair Value estimate with today’s market price, so you always have context for your decision. Plus, since Narratives update as soon as new news or financial data is released, you stay ahead of the curve with the latest information reflected right away.

For example, some investors see Samsung Electronics thriving thanks to booming AI chip demand and set their Fair Value above ₩100,000. Others flag intense competition and market risks, estimating fair value closer to ₩58,500. Your Narrative makes the difference.

Do you think there's more to the story for Samsung Electronics? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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