Global AI stocks ‘plunge’ amid concerns over AI investment ... Could semiconductors face a ‘Black Monday’?

[Financial News] Major global AI-related stocks plunged on negative outlooks that emerged after earnings announcements, raising a red flag for domestic semiconductor stocks. Analysts said market concerns could weigh on share prices in the short term, but that the broader trajectory of the AI industry remained intact.
According to the financial investment industry on the 1st, AI-related stocks all weakened on the U.S. stock market in New York on the 30th of last month (local time). Intel, a U.S. semiconductor stock, plunged 28.58%, while Nvidia and AMD fell 4.22% and 10.88%, respectively. SK Hynix’s American depositary receipts (ADRs), listed on the U.S. stock market, also fell 7.95%.
Concerns about the burden of AI investment came to the fore after Intel issued an earnings forecast well below market expectations (consensus). On the 29th (local time), Intel forecast adjusted earnings per share (EPS) of $0.25 and revenue of $15 billion to $16 billion for the fourth quarter of this year, below consensus estimates of $0.43 in EPS and $17.1 billion in revenue.
The fact that this came just after concerns about AI investment surfaced as Google parent Alphabet Inc. reported earnings on the 28th of last month (local time) also contributed to the steeper declines in related stocks. Alphabet fell 12.64% on the 29th of last month, local time, and another 1.40% on the 30th. Its third-quarter search revenue was $63 billion, below the consensus estimate of $65 billion. The market interpreted concerns about declining revenue as not only a threat to Alphabet’s AI business but also a sign that AI investment was not quickly translating into results.
Analysts expect concerns about the AI industry to persist in the market for the time being, but believe stocks will rebound over the longer term. While the latest earnings reports have heightened market concerns about AI investment, they say AI demand remains robust and the trend is expected to continue.
Lee Jae-won, a researcher at Yuanta Securities Korea Co., Ltd., said, “Intel’s and other companies’ earnings confirmed the strength of AI demand, but heightened concerns about investment funding and cash flow.” He added, “We should nevertheless consider why these companies continue investing in AI even at the expense of their cash flow.” He continued, “Companies that fail to prove they can monetize their AI investments will fall behind, but they will not change the overall trajectory of AI,” adding, “Foreign investors’ selling pressure will persist in the short term, but ultimately, it is just a small fluctuation within the broader framework of change.”
[email protected] Im Sang-hyeok Reporter