"Korea Is an AI Bubble Warning Sign"... FT Says Heavy Concentration in Samsung Electronics and SK hynix Is Shaking the KOSPI

[Financial News] The Financial Times (FT) has pointed to South Korea's stock market as a prime example of the side effects caused by a rush into artificial intelligence (AI) investments. It said too much money has flowed into Samsung Electronics and SK hynix, while single-stock exchange-traded funds (ETFs) that track those names have amplified volatility and shaken the broader KOSPI. Still, FT said it is too early to view this as a sign of an AI bubble burst, calling AI a "productive bubble" that could reshape the economy over the long term.
In a column published on the 1st local time, FT columnist John Plender cited South Korea as a leading example in his analysis of the AI investment frenzy. He said single-stock ETFs based on Samsung Electronics and SK hynix have magnified price swings in the two stocks, and that the broader KOSPI was hit hard as the two companies, which account for a dominant share of market capitalization, came under pressure. He also noted that the South Korean government has recently tightened investment rules by suspending new listings of single-stock leveraged ETFs and tripling the minimum deposit requirement.
Plender said this trend mirrors the AI-driven concentration seen in the U.S. stock market. He noted that the Magnificent Seven (M7) — Microsoft, Apple, NVIDIA, Google, Amazon, Meta, and Tesla — lost about $2 trillion in market value in June alone, meaning they are no longer moving as a single investment group.
He said concerns are growing over whether expanded investment in AI infrastructure will translate into real profits. At the same time, hyperscalers such as Microsoft, Amazon, Alphabet, and Meta have announced capital expenditures of more than $1 trillion for 2025-2026, raising worries about debt burdens and weakening profitability. Citing Citigroup analysts, Plender said, "The M7 is now effectively over as a concept for explaining the market."
He stressed, however, that it would be wrong to dismiss the AI boom as nothing more than a bubble. Referring to the Bank for International Settlements (BIS), which recently described AI as a technology that "enhances the production of knowledge itself," he said AI is closer to the kind of productive bubble that has appeared repeatedly throughout history. During Britain's railway bubble in the 1840s, for example, excessive investment led to multiple unnecessary lines being built between Leeds and Manchester, yet railroads eventually became a core foundation of the Industrial Revolution. Plender said, "Like the internet bubble, an early investment frenzy may involve enormous waste of capital, but in the long run it acts as a catalyst for innovation." He added, "AI is also likely to fuel overheating and rising debt in the short term, but it has a strong chance of becoming a foundation that transforms productivity and industrial structure."
He advised investors to diversify across countries and asset classes and to raise their cash holdings rather than concentrating on a single country or a handful of AI stocks. He also added that a new AI stock concept called "MANGOS" has recently emerged in the market, grouping Meta Platforms, Anthropic, NVIDIA, Google, OpenAI, and SpaceX.

[email protected] Kim Kyung-min Reporter