The artificial intelligence (AI) boom that has driven global stock markets is facing skepticism. Key semiconductor companies, including Lam Research, have issued guidance that falls short of the heightened market expectations, while legal risks surrounding tech giant Meta have intensified selling pressure across the sector.
Despite short-term improvements in performance, doubts about the sustainability of AI investments and the burden of regulatory costs are raising alarms about a potential 'AI bubble correction.' However, while investor sentiment was subdued early in the trading session, leading semiconductor stocks managed to close higher.
According to the Korea Exchange, the KRX semiconductor index fell by 0.46% on the day. In contrast, Samsung Electronics ended the day at 215,500 won, up 0.47% from the previous trading session, while SK Hynix rose 4.42% to close at 1,277,000 won following news that its subsidiary Solidigm had withdrawn its plans for an initial public offering (IPO).
The mixed performance of domestic semiconductor stocks was influenced by fatigue over AI investments and legal risks that emerged from the previous night’s trading on Wall Street. On October 22, the Philadelphia Semiconductor Index, which is heavily weighted toward tech stocks, plummeted by 6.72% to close at 4,815.12.
Leading the decline was Lam Research, a global leader in semiconductor etching equipment. The company reported record earnings for the first quarter of fiscal year 2027 (July to September), with revenues of $8.22 billion and adjusted earnings per share (EPS) of $2.20, exceeding market expectations.
However, investor focus shifted from the strong results to the short-term guidance provided by Lam Research. The company’s revenue forecast for the second quarter (October to December), which was set at a lower bound of $8 billion, fell below consensus estimates, leading to a rapid cooling of investor sentiment. Lam Research's stock dropped 11.76% to close at $230.15, with the fallout affecting the entire semiconductor value chain, including Applied Materials (-8.16%), ASML (-6.93%), Micron (-6.26%), and NVIDIA (-4.40%).
Additionally, legal risks for big tech companies have materialized. A New Mexico district court imposed a hefty $25 billion fine on Meta Platforms for violations of consumer protection laws related to the Facebook user data breach during the 2016 U.S. presidential election. This represents the largest state-level penalty against a big tech firm and highlights the increasing legal and regulatory risks faced by companies expanding in the AI and data ecosystem.
Opinions in the securities industry are divided on whether the current sell-off is merely a short-term profit-taking event or the beginning of a structural adjustment due to uncertainties surrounding AI profitability (ROI). One industry insider noted, "The pace of generating commercial results is slow compared to the astronomical capital expenditures (CapEx) of big tech, suggesting this could be an early signal of a bubble burst due to AI investment fatigue."
Conversely, an asset management executive argued, "The multi-year investment cycle in data center expansion and memory semiconductors remains valid. This decline is a normalization of the previously overheated market, leaning more towards short-term profit-taking rather than a structural downturn."
* This article has been translated by AI.
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