Doubts Over 'AI Profitability' Resurface... How Will the KOSPI Fare Today?

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Following a drop of more than 2.8 percent in the U.S. Nasdaq index over the weekend and analyses indicating that big tech companies' cash flows are worse than expected, concerns are growing that the South Korean stock market could experience turbulence today (November 2). Projections suggest this volatile situation will likely persist for the time being.

Reporter Lee Seong-hoon has the details.

[Reporter]

What the market is currently focusing on is whether major tech companies will be able to reap actual profits later, commensurate with the massive amounts of money they are pouring into artificial intelligence development.

Alphabet and Amazon have virtually no remaining cash after making investments with their earnings, while Meta has even seen its credit rating outlook downgraded to negative.

OpenAI, the operator of ChatGPT, initially set a target of 30 billion dollars in fundraising, but the investment commitments secured so far stand at only 11 billion dollars.

Amid forecasts that only companies securing overwhelming technology will survive in the market, a limitless competition is underway. Doubts over how long such investments can be sustained and what will happen to companies lagging behind in the competition are periodically shaking the market.

The South Korean stock market, where half of the KOSPI index is concentrated in just two companies—Samsung Electronics and SK Hynix—is being swept up even more severely each time.

The key for today's stock market is to what extent the impact of the Nasdaq index plunging by nearly 3 percent in the New York market over the weekend will be reflected.

[Noh Dong-gil / Researcher, Shinhan Securities: Considering the drop in the U.S. market, it seems likely to start weak. However, given that the South Korean market's decline was partially reflected on Friday, it doesn't seem likely to fully absorb all the shocks from the U.S.]

At the same time, diagnoses are also emerging that since the AI competition and investments are not in a mood to immediately subside, the situation needs to be viewed with a long-term perspective.

[Park Sang-hyun / Researcher, iM Securities: South Korea's semiconductor exports are currently continuing to maintain a record-breaking export growth trend, and the possibility that the AI investment fever will turn into a bubble or the collapse of an overheating market—as some claim—is actually not very high.]

With the U.S. mid-term elections and earnings announcements from companies such as Apple and AMD slated for early in the week, the South Korean stock market is expected to be influenced once again depending on these outcomes.
※ Please note: This article was translated by AI and may contain errors.