Alphabet, Google's parent company, reported better-than-expected earnings and reaffirmed its commitment to expanding artificial intelligence (AI) investments, leading to a rise in domestic semiconductor stocks. Market attention is shifting from AI semiconductor firms like NVIDIA to the earnings of major cloud companies such as Microsoft, Meta, and Amazon.
On July 23, the Korea Exchange reported that the KOSPI closed at 7,096.89, up 299.19 points (4.40%) from the previous trading day. Foreign investors purchased a net 2.15 trillion won, and institutions bought a net 100.6 billion won, driving the index higher, while individual investors sold a net 2.22 trillion won.
Samsung Electronics rose 3.65% to 270,000 won, and SK Hynix increased 4.86% to 191,900 won, contributing to the KOSPI's upward trend, influenced by Alphabet's strong performance. Alphabet reported second-quarter revenue of $119.8 billion, surpassing market expectations of $116.9 billion. Google Cloud, which benefits significantly from AI, saw its revenue increase by 82% year-over-year, exceeding market forecasts.
Alphabet also confirmed its plans to expand AI investments, raising its capital expenditure (CapEx) forecast for the year from $180 billion to $190 billion to between $195 billion and $205 billion. The second-quarter CapEx reached $44.9 billion, double that of the same period last year. According to Hana Financial Investment, following Alphabet's earnings surprise, the average monthly stock returns for Samsung Electronics and SK Hynix were 11% and 17%, respectively. In contrast, when earnings fell short of expectations, returns were only 2% and -3%.
This performance is seen as a confirmation that the AI investment cycle is still ongoing, beyond just Alphabet's strong results. Although the recent AI semiconductor rally has slowed, concerns about whether expanded AI investments will translate into actual profits have grown. However, Alphabet's simultaneous presentation of cloud growth and increased AI infrastructure investment has alleviated some of these worries.
Investors are closely watching the investment plans of hyperscalers, which are pouring significant funds into AI infrastructure. As these companies expand their investments in data centers and AI servers, demand for NVIDIA's GPUs is expected to continue, benefiting domestic semiconductor firms like SK Hynix and Samsung Electronics, which supply high-bandwidth memory (HBM).
Attention is now turning to next week, with Microsoft and Meta set to report earnings on July 29, followed by Amazon on July 30. Key points of interest will include Microsoft's Azure growth rate and AI-related capital expenditures, Meta's expansion of AI infrastructure and the impact of AI on its advertising business, and Amazon's AWS growth and data center investment plans. The results from these tech giants are expected to be pivotal for both U.S. big tech and domestic AI semiconductor and data center stocks.
KB Securities identified Samsung Electronics as the biggest beneficiary of Google's AI ecosystem, projecting that Google's AI investment will account for more than a quarter of total U.S. big tech investments this year. Samsung is estimated to supply 50% of Google's server memory and about 80% of HBM, indicating direct benefits from Google's expanded AI investments.
Kim Dong-won, head of research at KB Securities, stated that Samsung Electronics is estimated to account for half of Google's server memory supply and about 80% of HBM supply, calling it the "biggest beneficiary of Google's AI ecosystem."
* This article has been translated by AI.
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