‘AMD shock’ weighs on the KOSPI…seen opening lower [Market Preview]

On the New York stock market on the 4th (local time), worries that data-center-driven semiconductor demand has fallen short of expectations this year dragged semiconductor shares lower. Analysts said Korea’s stock market, which has a heavy weighting in chipmakers, is also likely to open weaker.

According to the Korea Exchange on the 5th, the KOSPI closed the previous session up 1.57% at 5,371.10. The index opened down 0.52% at 5,260.71, but reversed into gains, topping the 5,300-point mark and setting a new all-time high just one day after the prior record. Samsung Electronics rose 0.96% to close at 169,100 won, becoming the first Korean company to reach a market capitalization of 1,000 trillion won.

By investor type, institutions net bought 1.7830 trillion won. Retail investors and foreigners net sold 1.0070 trillion won and 936.6 billion won, respectively. However, since most of the institutional flow came from financial investment firms, some interpreted the move as retail money—expecting a KOSPI rise—having lifted the market via exchange-traded funds (ETFs).

Analysts also expect the KOSPI to start lower today, as a rotation trade played out on Wall Street for a second straight day—taking profits in artificial intelligence (AI) and semiconductor themes while buying value stocks. The Dow Jones Industrial Average rose 0.53%, but the Standard & Poor’s (S&P) 500 fell 0.51% and the tech-heavy Nasdaq Composite slid 1.51%.

While the software sector extended another bout of consolidation, attention focused on the Philadelphia Semiconductor Index—closely watched in Korea—plunging 4.36%. The trigger was an earnings release from AMD, a maker of central processing units (CPUs) and graphics processing units (GPUs). AMD posted record results that beat expectations, but guided that first-quarter revenue would decline 5% from the previous quarter. After the announcement, AMD’s market capitalization sank 17.31% in a single day.

Seo Sang-young, an analyst at Mirae Asset Securities, said, “It is critical that AMD’s data-center revenue missed market expectations,” adding, “A broader deterioration in sentiment across semiconductor and AI themes is unavoidable.”

In addition, a Cisco Summit discussion involving a large number of technology companies highlighted that AI investment is moving from a phase of indiscriminately buying high-performance GPUs to a phase of optimizing overall IT system efficiency. Seo said, “This has been read by the market as a signal that AI-related capital expenditures may be entering a pace-adjustment phase, and it likely triggered heavy selling not only in semiconductors but also in small- and mid-cap AI theme stocks that had risen purely on expectations without earnings.”

Still, some expect the semiconductor-led weakness to ease somewhat as trading progresses. Han Ji-young, an analyst at Kiwoom Securities, said, “Korea’s market will not be immune to the sharp drop in U.S. semiconductor and AI stocks and will start weaker, but semiconductor names such as Nvidia, Micron and SanDisk are rebounding in after-hours trading, and the KOSPI—unlike the U.S.—does not carry a high valuation burden, so it should claw back part of the intraday decline.”

Jeon Beom-jin forward@hankyung.com