[Seoul Market Wrap] AI Stocks Soar on Positive News, Driving Market Higher

Concerns about AI investment monetization eased due to good performance of Space Samsung Electronics and SK Hynix lead the index rise

Key market trends

• ① SpaceX·Supermicro's good performance… Check AI physical demand

SpaceX's performance announced after the U.S. stock market closed significantly exceeded market expectations.

Sales reached $14.58 billion, exceeding market expectations of $12.7 billion, and growth in the AI sector continued.

By presenting confidence in turning a profit and future profitability and raising the capital expenditure outlook higher than before, some of the concerns raised about the sustainability of AI investment that have recently been raised are alleviated.

Supermicro, a data center-related company, also recorded provisional sales of around $19 billion in the first quarter, a 3.8-fold increase compared to the previous year.

It significantly exceeds the existing guidance of $15 billion, showing that actual field demand is strong despite the controversy over AI infrastructure investment.

Both companies surged in after-hours trading, affecting domestic AI and semiconductor investment sentiment.

• ② Semiconductor exports surge by 220%... Samsung Electronics and SK Hynix soar

With exports showing a strong performance from October 1 to 20, semiconductor exports surged by more than 220% compared to the same period last year.

Contrary to concerns about the sustainability of AI investment, it is highlighted that demand for semiconductors continues to be strong in the fourth quarter.

Samsung Electronics and SK Hynix rose significantly, leading the rise in KOSPI.

Buying is focused on large-scale semiconductors, with the contribution of these two stocks to approximately 90% of the overall increase in the KOSPI.

Semiconductor, construction, aviation, and some pharmaceutical companies are also strong.

Foreign Investors turned to net buying, mainly in electrical and electronics, and also made small purchases in chemicals, transportation equipment, construction, and finance.

Institutions made net purchases in electrical and electronics, pharmaceuticals, and finance, and in the KOSDAQ, purchases flowed into semiconductor-related industries.

• ③ Oil price burden eased due to expectations of US-Iran negotiations

Expectations of easing the situation in the Middle East also have a positive effect on investor sentiment.

International oil prices fell amid reports that Pakistan, a mediating country, had delivered a mediation plan to Iran for negotiations with the United States.

It is reported that the arbitration plan includes payment of interest on frozen funds and permission to visit nuclear facilities.

As reports emerged that both sides had pre-approved the arbitration plan, some of the burden on oil prices from the Middle East, which had recently pressured the stock market, was alleviated.

During the day, Australian data center company NextDC lowered its performance outlook due to issues with securing power, and its stock price plummeted by more than 40%, temporarily shaking AI-related stocks.

Supply and demand and industry

Foreign Investors turned into net buyers, focusing on electrical and electronics. Chemicals, transportation equipment, construction, and finance also have an advantage in buying.

Institutions made net purchases in electrical and electronics, pharmaceuticals, and finance, and in KOSDAQ, purchases centered on semiconductor-related industries.

Samsung Electronics and SK Hynix led the rise in the index, and semiconductor, construction, aviation, and some pharmaceutical stocks also performed strongly.

On the other hand, as supply and demand concentrated on large semiconductors, the number of stocks that fell in both markets was quite large.

Market Man's Perspective

Recently, the market has been moving in a big way with each AI-related news. In particular, a series of negative forecasts based on the possibility of delays in funding and investment required for data center construction put pressure on investor sentiment.

Today, the opposite data came out. SpaceX and Supermicro's performance showed that investments in AI and data centers are actually leading to increased sales. In Korea, semiconductor exports increased by more than 220% as of October 20, confirming that physical demand remains strong.

Of course, as in the case of NextDC, the issue of securing power and financing for data centers is something that needs to be continuously checked. In the end, whether actual companies' performance estimates are lowered is more important than the outlook for AI investment in the future. To date, there has been no clear downward movement in the performance outlook for domestic semiconductors.

The recent drop has been significant. Based on the previous day's closing price, SK Hynix has fallen by about 60% from its peak, and its PER based on this year's expected performance has also fallen to less than 4 times. While we continue to check AI-related negative news, it is time to also look at the decline that has widened the gap with actual performance. It is necessary to continue to monitor the movements of industries that have recently shown strong performance and stocks with improving performance.

Source: Market Man's stock story t.me/shmstory

YouTube: Sihwangman TV www.youtube.com/@blueoak1004

This article was rewritten from Shihwangman's Stock Story Telegram post with the author's consent. All content may contain errors and cannot be used as a basis for buying or selling as it is not a recommendation to buy or sell. The content of this post cannot be used as legal basis under any circumstances.