Concerns Over an AI Peak-Out Prompt a $950 Billion Counterargument... Semiconductor Stocks Extend Losses for a Fifth Straight Week

[Financial News] As semiconductor stocks have remained weak for five straight weeks amid concerns that AI investment may be peaking, a countervailing development emerged over the weekend: a $950 billion AI and semiconductor cooperation deal. Still, analysts say it is difficult to predict a trend reversal, given the market's high volatility and continued capital outflows.
On the 27th, SK Securities said the KOSPI closed last week at 6,690.62, down 1.91% from the previous week's final trading day on the 16th. While the index's decline was limited, volatility inside the market was intense, with sidecar mechanisms triggered for 10 consecutive trading days. Alphabet Inc. raised its capital expenditure guidance again in its earnings release, confirming demand for semiconductors, but market caution did not ease much.
Against this backdrop, the San Francisco AI Summit announced a combined $950 billion in AI and semiconductor cooperation between domestic companies and global tech giants. In the cryptocurrency market, perpetual futures for Samsung Electronics and SK hynix were also trading 1% to 2% above their closing prices on the domestic market as of the 24th.
Cho Joon-gi, a researcher at SK Securities, said, "There may be a process of verifying the headline figures announced, as well as the binding nature and timing of recognition for individual contracts, but counterarguments have been presented to the points of concern, such as an AI capex peak-out and demand declines driven by efficiency gains." He added, "It will help put the brakes on the recent unfavorable narrative."
Still, it is hard to guarantee an immediate rebound in semiconductor stocks. The sector has been weak for five consecutive weeks and plunged 5.72% on the 24th. After the domestic market closed, KOSPI 200 Index night futures fell an additional 2.8%.
Cho explained, "Given that this is a major demand catalyst coming after five straight weeks of weakness, a sharp drop on the 24th, and additional declines in KOSPI 200 Index night futures, the market's price action at the open on the 27th will be very important."
The market's underlying strength is still weak. Foreign investors posted net buying in KOSPI for a second straight week, easing the heavy selling pressure, but the KOSPI 200 Volatility Index remained elevated at 78.7 points last Friday. Margin loans in KOSPI have fallen from around 30 trillion won at their peak to 26 trillion won, while KOSDAQ has dropped from 11 trillion won to 7 trillion won. Customer deposits have also declined from 140 trillion won to 104 trillion won.
This week is packed with key events that could determine the market's direction. In Korea, SK hynix is scheduled to release its finalized earnings and hold a conference call on the 29th, followed by Samsung Electronics on the 30th. In the United States, Microsoft and Meta Platforms will report earnings in the early hours of the 30th Korea time, followed by Amazon and Apple in the early hours of the 31st. The key focus will be whether big tech continues to expand capital spending and how that affects free cash flow.
Cho said, "This week is a period where monetary policy and earnings are compressed into two or three days, so we need to watch the reaction function rather than the direction itself."

[email protected] Choi Doo-seon Reporter