[Good Morning Stock Market] South Korea to See Continued Volatility After U.S. AI Stock Plunge

Broad selloff, with Intel plunging 28.6%
Room for bargain hunters to step in, but volatility tied to big tech earnings...

Amid a sharp selloff in artificial intelligence (AI)-related stocks on U.S. markets, volatility is also expected to increase in the Korean stock market. However, some say investors should stay on the sidelines rather than reduce their exposure, given the resilience of fundamentals despite domestic and international events.

On Oct. 30 (local time), the S&P 500 fell 1.82% to close at 7,580.07. The Nasdaq Composite ended at 25,437, down 2.86%, while the Dow Jones Industrial Average closed at 51,770.31, down 1.09%. Major indexes plunged as concerns grew over uncertainty surrounding AI investment and demand, following weaker free cash flow (FCF) at Amazon and lower guidance from Intel, triggering a broad selloff in AI stocks.

Results from U.S. big tech companies (large information technology companies), including Microsoft (MS), Alphabet, Amazon, Intel and SanDisk, reaffirmed the AI industry's solid growth momentum. However, capital expenditure (CAPEX) is increasing faster than operating cash flow is improving, heightening uncertainty over investment payback periods and financing burdens. "As Intel's results showed, concerns about weak business-to-consumer (B2C) demand amid rising memory prices have also yet to be dispelled, so market caution as investors seek to assess the situation is expected to persist," said Han Jiyoung, an analyst at Kiwoom Securities.

On Oct. 30, the KOSPI fell for a second consecutive day, dipping below the 5,800 mark during trading. The KOSPI, KOSDAQ and won-dollar exchange rate are displayed on screens in the dealing room at Hana Bank headquarters in Jung-gu, Seoul. As of 9:02 a.m., the KOSPI was down 187.75 points, or 3.16%, from the previous session at 5,749.81, extending its losses. 2026.10.30 Photo by Cho Yongjun

Some say doubts about AI investment are having a greater impact on the market this week than any gains stemming from the resolution of political uncertainty surrounding the U.S. midterm elections. "While easing uncertainty after the midterm elections will help restore risk appetite in the short term, a fundamental recovery in investor sentiment will depend on how much concern over the AI industry can ease," Han said. Against this backdrop, results from major big tech companies such as Apple, Palantir and AMD, due this week, are expected to be important.

With results from major cyclical companies such as Korea Aerospace Industries, S-Oil, Hyundai Department Store and LG Chem still due in the Korean stock market, demand is expected for stock-picking based on reviews of individual companies' results. However, with results from market leaders Samsung Electronics and SK hynix now in, the extent of any further upward revisions to KOSPI operating profit forecasts, including for semiconductors, for 2027 and 2028 will be important. As of Oct. 30, market expectations for KOSPI operating profits in 2027 and 2028 were higher than a week earlier. South Korea's October exports also posted a surprise, supported by strong performance in key items such as semiconductors, which is positive for further upward revisions.

Market observers say high volatility is expected to persist, but investors should stay the course because earnings forecasts and other fundamentals remain solid. "Share prices have re-entered oversold territory, while earnings forecasts are actually improving. Given the resilience of fundamentals, a wait-and-see approach is likely to be more effective than responding to this week's volatility by reducing exposure," Han said.

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