The trillion-dollar company that still looks cheap

There’s a new member of the trillion-dollar club for listed companies. Its valuation looks questionable. But to my mind it represents outstanding value and has the potential to make investors a solid return. Suffice to say I’m not talking about SpaceX. 

With all the coverage about Elon Musk’s SpaceX IPO and its intergalactic valuation, you may not have noticed when Samsung quietly entered the club through a side door a few weeks ago. 

It has risen strongly on the back of the surge in semiconductor earnings and now joins an exclusive group of 13 other companies which includes Apple, Alphabet, Amazon, Broadcom, Berkshire Hathaway, Eli Lilly, Meta, Microsoft, Nvidia, TSMC, Saudi Aramco, Tesla and – another recent entrant – South Korean chip maker SK Hynix. 

What is interesting about Samsung is that the South Korean giant trades on just 6x expected earnings¹.  

Yes, you read that correctly. The average trillion-dollar company, excluding Samsung, SK Hynix and Tesla, is priced on 24x forward earnings². Tesla trades on an astronomical 208x valuation, skewing the average significantly³. SK Hynix is priced similarly to Samsung but there’s a cheaper way to buy it that we’ll come to later.  

Chip-making division drives record quarter  

In the jargon of the industry, this means that Samsung is on a forward price/earnings (P/E) ratio of six versus 24. In theory, Samsung shares could rise four-fold without the company lifting earnings expectations and it would still not look out of place against its global trillion-dollar peers.  

It also boasts the second-highest net income in the trillion-dollar peer group⁴ (after Nvidia). Strong earnings momentum, combined with a low valuation, continues to make Samsung the largest position in the Artemis SmartGARP Global Emerging Markets Equity Fund.

In Q1 its revenue spiked up to $91.5bn – compared with $11.4bn a year earlier⁵. Its operating profit was $39bn this year, versus $4.5bn in the same quarter in 2025⁶. 

This was a record, driven by its Device Solutions division – that’s the one that manufactures memory chips, processors and display panels. The huge demand from AI for semiconductors has led to a global shortage and enabled Samsung to hike its prices.  

Samsung shares could rise four-fold without the company lifting earnings expectations and it would still not look out of place against its global trillion-dollar peers

Such demand doesn’t look like waning soon and the company is progressing with its memory chip development programme to maintain its strong position. Modern large language AI models require incredibly fast memory to keep the AI processors (GPUs) running smoothly without data bottlenecks.  

Samsung’s new HBM4E chip represents cutting-edge memory technology that will sit alongside Nvidia GPUs and should help reduce heat resistance and improve energy efficiency.  

Non-AI revenues  

Of course, Samsung is about more than just chips. Most of us know the company for its televisions and mobile phones. The margins here aren’t as impressive – 6% for display panels, 7.3% for phones⁷ – but these contribute significantly to overall profits.  

The company isn’t resting on its semiconductor laurels. It is focused on driving down costs and raising its sights higher in terms of output – concentrating on higher-margin, higher-end products, such as large display screens and foldable phones. 

It benefits not just from its own production of chips to power AI but the way the technology can be incorporated into its consumer technology products to enhance its offering and maintain its competitive advantage. 

A sceptic may argue that its 157.5% share price rise this year⁸ is primarily about semiconductors and this story may not last forever. On these grounds, the valuation of Samsung looks attractive but not ridiculously cheap.  

I wouldn’t disagree. But I would argue that if the same degree of scepticism were applied to all technology stocks – and certainly to most members of the trillion-dollar club – valuations elsewhere would look very different. 

Follow the index or invest selectively? 

Market concentration in the S&P 500 amid the surge of mega-cap technology stocks is widely recognised. Historically, the top 10 stocks have represented around 20% of the index⁹. Today it is almost twice that¹⁰.  

We see a similar trend within emerging markets. These have outperformed developed markets this year – up more than 25% to the end of May, versus 11.9% for the MSCI World index¹¹. But index returns have been heavily concentrated in a narrow group of large technology and semiconductor-related companies.  

To give some context to the concentration, 95% of the index returns in April were driven by technology¹². TSMC, SK Hynix and Samsung alone were responsible for around 70% of the overall return¹³. And these three now account for close to 30% of the MSCI Emerging Markets index¹⁴.  

As SpaceX floats on the NASDAQ amid a fanfare of coverage, many sensible sceptics are questioning the valuation. Will we look back on this as the point when the tech and AI bubble reached bursting point – where modest hope turned to hype and hubris? 

A cheaper way to access the AI growth story  

None of the members of the trillion-dollar club are pricing in quite the Shakespearian “expectation of plenty” levels that come with SpaceX – apart, perhaps from Tesla – but there are reasons to be fearful.  

Will we look back on this as the point when the tech and AI bubble reached bursting point – where modest hope turned to hype and hubris?

What Samsung shows us is there are cheaper ways to access tech and AI growth stories. Underlining this point further, we recently initiated a position in tech holding company SK Square, whose 20% share of SK Hynix represents the bulk of its own market cap. It trades on a 40% discount to NAV, enabling us to buy Hynix for a P/E of less than 4¹⁵. 

Being selective and applying a strong valuation discipline to your investment approach may mean you miss out on further hype-fuelled growth. In my view, though, it mitigates risk and can help you generate more sustainable long-term returns.