NICE Investors Service: "Corporate Sales to Grow 21.5% This Year... AI Peak-Out Requires Mid- to Long-Term Monitoring"

NICE Investors Service Forecasts Industry Outlook Index at 187.2 for 2026
Growth Momentum Driven by Strong Performance in AI-Linked Industries
Renewed Oversupply from China Also Cited as a Risk Factor

NICE Investors Service expects major industries to grow by 21.5% year-on-year based on sales this year. While industries related to artificial intelligence (AI), such as semiconductors, are forecast to drive growth, the company pointed to risks such as a renewed surge in oversupply from China and macroeconomic environment factors.

On July 30, NICE Investors Service projected that the NICE Industry Outlook Index, based on 2026 sales, will reach 187.2, representing 21.5% growth compared to the previous year. The agency stated, "This revised forecast represents a significant upward adjustment from the previous estimate presented in January 2026, and we expect robust growth to continue in 2027 with the index reaching 207.1, surpassing 10% year-on-year growth."

The main momentum for growth comes from the boom in semiconductor and electronics, as well as power equipment and cable sectors, which are linked to AI. NICE Investors Service explained, "The global semiconductor industry has moved beyond its previous short-term cyclical trends and is experiencing an unprecedented period of high growth. Despite concerns about a peak-out, the strong market conditions are expected to persist through 2027." The agency went on, "On the demand side, solid internal cash generation among major tech companies and diversified funding channels have created ample liquidity buffers, supporting increased AI infrastructure investment. On the supply side, the high wafer consumption of HBM, time lags before new production lines become fully operational, and the shift to a contract-based business structure with increasing proportions of long-term supply agreements are alleviating the risks of oversupply that can accompany capacity expansion."

Accordingly, NICE Investors Service expects the growth gap between AI-linked industries and non-AI-linked industries to persist for some time. From an industrial structure perspective, it is forecast that, for the first time since 2011, the sales share of AI-linked industries within the index will exceed 50%. However, the agency also noted, "The growth and operating profitability of non-AI-linked industries are also expected to recover somewhat compared to last year," adding, "In particular, with rising geopolitical tensions in the Middle East driving up both oil prices and product spreads, the refining and petrochemical industries are projected to see a recovery in performance." An increase in investment in the semiconductor industry and AI infrastructure, together with wage increases at some companies, are expected to boost demand in the construction sector and stimulate consumption, which should partially ease the negative operating environment for the construction and retail industries.

The agency also highlighted potential risks that require mid- to long-term monitoring. First, it identified the speed at which AI services become profitable and the capital recovery performance of big tech firms as core variables. NICE Investors Service warned, "If capital expenditure payback is delayed, continued investment cannot be guaranteed," and added, "Furthermore, if aggressive capital spending prompted by U.S. supply chain restructuring and supply expansion based on technological independence by Chinese companies occur simultaneously, intense price competition could break out just as AI-driven excess demand slows, creating the risk of an accelerated downturn in the industry cycle due to these combined geopolitical factors."

The ongoing negative impact of oversupply from China on a number of domestic industries was also identified. As sluggish domestic demand continues in China, the country is addressing oversupply through increased offshore exports. NICE Investors Service pointed out that the petrochemical, steel, and display industries are the most adversely affected.

The agency also cited high inflation, a strong dollar, and high interest rates as macroeconomic risks. "Since the outbreak of the U.S.-Iran war, rising raw material prices and exchange rates have combined to increase the burden of import prices, and high inflation could become prolonged due to geopolitical conflicts and the formation of trade blocs," NICE Investors Service stated. "With the interest rate gap between Korea and the U.S. and the potential for further U.S. rate hikes, a significant increase in the won-dollar exchange rate is unlikely, and both supply-side and demand-side inflationary pressures persist. Therefore, the trend of high interest rates is expected to continue for a substantial period."

NICE Investors Service further diagnosed that this turn toward higher interest rates could trigger defaults among marginal companies burdened with debt. This is because lower-credit companies are exposed to greater risk of additional credit spread widening and default risk during periods of rising interest rates, increasing the potential for insolvency. The agency commented, "The exit of marginal firms during an upswing in the business cycle, as interest rates rise, is an inevitable phenomenon in a market economy and does not pose a systemic risk as long as the shock remains manageable." However, it also emphasized, "From the perspective of individual investors, now is the time for proactive inspection of low-credit companies with weak financial buffers and exposure to liquidity risk."

This content was produced with the assistance of AI translation services.