AI Fears Hit KOSPI... "Warning" It Could Fall Below 5,000

KOSPI Falls to Mid-5,000s Amid Concerns Over AI Investment Profitability
Foreign Investors Continue Net Selling as External Uncertainty Grows
Meta and Tesla's Third-Quarter Earnings on October 21 Hold the Key to a Rebound

A display board shows the related index at Hana Bank's dealing room in Jung-gu, Seoul, on Oct. 19, as the KOSPI opened down 179.64 points (3.17%) at 5,488.41. The KOSDAQ opened down 21.72 points (2.73%) at 773.06. Oct. 19, 2026. Photo by Kim Hyunmin

The KOSPI fell more than 1% amid ongoing concerns about the profitability of AI investments. Analysts said the index could fall below 5,000 in a worst-case scenario. Some also expect earnings reports from U.S. Big Tech companies, including Meta and Tesla, scheduled for this week to provide a potential catalyst for a market rebound.

KOSPI Falls to Mid-5,000s Amid AI Profitability Concerns

As of 10 a.m. on October 19, the KOSPI was trading at 5,569.79, down 1.73% from the previous trading day. The KOSDAQ was also trading at 783.39, down 1.43% from the previous session.

The KOSPI fell 14.4% last week, marking its biggest weekly decline of the year. On October 15 in particular, the KOSPI and KOSDAQ plunged more than 7% each, triggering circuit breakers.

The domestic market also came under pressure after all three major U.S. stock indexes fell last Friday amid heightened concerns about AI profitability. The Dow Jones Industrial Average fell 0.34% from the previous session, while the S&P 500 and the tech-heavy Nasdaq Composite dropped 1.09% and 2.15%, respectively. The Philadelphia Semiconductor Index plunged 3.83%. It fell for eight consecutive trading days, its longest losing streak since the 2008 U.S.-originated financial crisis.

The renewed focus on the credit risk of AI cloud company CoreWeave, whose shares fell 11.91%, has been a major factor behind recent declines in domestic and global markets. Some analysts say the company has entered distressed territory, with the value of its corporate bonds plunging amid excessive debt. Micron fell 5.63%, Broadcom dropped 4.52%, SK hynix's U.S. depositary receipts fell 6.58%, and AMD declined 5.95%.

In the domestic market, semiconductor stocks were also falling sharply as of 10:02 a.m. Samsung Electronics was down 1.04%, SK hynix 4.09%, SK Square 4.97%, and Samsung Electro-Mechanics 6.65%. By contrast, secondary-battery-related stocks were strong: LG Energy Solution rose 3.60%, Samsung SDI gained 3.21%, EcoPro advanced 2.34%, and EcoPro BM climbed 1.50%. Foreign investors were net sellers of about 30 billion won worth of KOSPI stocks, while individual investors were net sellers of 390 billion won. Institutions were net buyers of 300 billion won.

Analysts expect the KOSPI, which has a high weighting of memory semiconductor stocks, to continue falling if concerns about AI persist. Some have also raised the possibility that the index could fall below 5,000 in a worst-case scenario. Jo Ain, a researcher at Samsung Securities, cited 5,000 as a support level, saying, "With investor sentiment sharply deteriorating, heightened volatility could persist in the short term." She added, "Until foreign selling eases and external uncertainties subside, it would be appropriate to avoid aggressively increasing exposure and focus on risk management."

Lee Jaeman, head of the Global Investment Analysis Department at Hana Securities, said, "The current downturn is expected to attempt a rebound in a W-shaped pattern, with the second low estimated to be around 5,300." He added, "For the KOSPI to turn around, oil prices, interest rates, and exchange rates need to stabilize, and foreign selling needs to ease."

Upward Revisions to U.S. Big Tech Earnings Forecasts Could Hold the Key to a Rebound

Markets are watching earnings reports for the third quarter from major U.S. companies scheduled for this week, October 19-23. Analysts say the market could find a catalyst for a turnaround if U.S. Big Tech companies report earnings that exceed expectations.

Meta and Tesla will report earnings after the U.S. market closes on October 21. Meta's expected revenue is about $63.3 billion. Its recently launched AI agent, Muse, has received favorable reviews, but the key question is whether the company can absorb the costs of expanding investment in AI infrastructure.

Tesla is expected to report revenue of $27.9 billion and earnings per share (EPS) of $0.45. Although third-quarter vehicle deliveries exceeded market expectations, the profitability of its automotive business and the investment burden of its autonomous driving and robotaxi businesses are considered key variables. Major technology companies including IBM, Texas Instruments, and Lam Research will also report earnings that day. Their results are seen as key indicators for gauging future semiconductor demand and capital expenditure outlooks.

Han Jiyoung, a researcher at Kiwoom Securities, said, "Third-quarter results from U.S. Big Tech companies such as Meta, Tesla, and Lam Research will be an important test of whether market confidence in AI can recover." She added, "For Meta in particular, the key question goes beyond whether it delivers a simple earnings surprise or raises its capital expenditure (CAPEX) guidance: it is whether AI-driven improvements in advertising efficiency can translate into revenue growth in its core business."

Kyle Rodda, a senior analyst at Capital.com, told Bloomberg, "This is a time of heightened market uncertainty." He added, "Interest rate uncertainty continues as AI companies' earnings reports approach, and the U.S. midterm elections are also just a few weeks away."

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