Since October 1, the Nasdaq Composite Index has fallen by about 5%, while the S&P 500 has decreased by 1.6%. Although these figures suggest a gradual decline, the situation is different for major AI-focused tech stocks, which have plummeted between 10% and 17%. Despite increasing investments in AI, concerns about profitability are driving these sharp declines. The South Korean stock market has also been volatile, reacting to fears surrounding the performance and earnings of U.S. tech giants.
◆AI Chicken Game Continues with Major Debt Issuances
According to reports from Bloomberg and other outlets, Meta is considering issuing at least $20 billion in dollar and euro-denominated corporate bonds. This move comes just six months after raising $25 billion in April. Oracle is also seeking to raise $20 billion to expand its AI infrastructure investments, planning to secure $10 billion through new shares and another $10 billion through corporate bonds. Alphabet, Google's parent company, began selling €6 billion in corporate bonds on November 2.
Collectively, Meta, Alphabet, Amazon, Microsoft, and Oracle have raised $326 billion through stock and bond issuances by the end of October 2026, more than triple the total amount raised last year. However, skepticism about the astronomical investments in AI is growing, with doubts about whether these investments will yield sufficient returns.
Recent stock trends reflect this sentiment. Last month, Alphabet's shares fell by 18.7%, while Meta's dropped by 15.2%. Semiconductor companies like Nvidia (-10.4%), Micron (-16.9%), and AMD (-17.5%) also experienced double-digit declines. The Philadelphia Semiconductor Index fell by 15.4% during the same period. It is estimated that the market capitalization of Nasdaq 100 companies decreased by over $2 trillion in October. The New York stock market also struggled under the weight of AI investment concerns, with the Nasdaq index dropping 1.07% and the Philadelphia Semiconductor Index plummeting 3.37%.
◆KOSPI Struggles Amid AI Investment Skepticism
The situation is particularly challenging for the South Korean stock market. While the expansion of AI investments should boost demand for memory semiconductors, the index has not performed well. The volatility in the KOSPI is increasingly influenced by investment uncertainties surrounding the U.S. AI industry rather than the domestic semiconductor market itself.
According to the Korea Exchange, the KOSPI fell from 7,003.74 on October 2 to 5,859.08 on November 2, a decline of 16.34% in just one month. On October 15, the index dropped 7.57% in a single day to 5,554.22, and on October 26, it fell to 5,469.47. Each of these sharp declines followed negative news from U.S. tech companies.
On November 3, the domestic semiconductor giants also faced significant losses due to the weakness in U.S. tech stocks. Samsung Electronics, the largest company by market capitalization on the KOSPI, fell by 4.15%, while SK Hynix dropped by 5.03%. Other semiconductor-related stocks, including Samsung Electronics Preferred (-3.05%), SK Square (-5.37%), and Samsung Electro-Mechanics (-7.38%), also saw substantial declines. The KOSDAQ market fell by over 4%, closing at 704.39, down 29.97 points (4.08%) from the previous trading day. The index, which had risen to 734.36 the day before, fell back into the low 700s.
Lee Jae-won, a researcher at Yuanta Securities, noted, "Concerns about AI profitability and funding burdens remain. However, it is essential to pay attention to why big tech companies are expanding investments even at the expense of cash flow." He added, "While differentiation based on individual companies' profitability and funding capabilities is inevitable, this does not necessarily indicate the end of the AI investment cycle."
* This article has been translated by AI.
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