[Click eStock] "'Surprise Earnings' Nvidia... Domestic IT Still Positive"

Artificial intelligence (AI) leader Nvidia announced an 'earnings surprise,' and on the 24th, Korea Investment & Securities stated, "We maintain our previous view that the weighting of large domestic information technology (IT) sectors should be increased in the second half of the year."

[Image source=Yonhap News]

On the same day, researchers Yeom Dong-chan and Shin Chae-rim from Korea Investment & Securities said, "While the earnings of global IT companies have shown positive results, it is still too early to worry about the possibility of a peak-out (decline after the peak) next year."

Researchers Yeom Dong-chan and Shin Chae-rim pointed out that "the situation in Korea is different from the U.S., where there is a concentration in the IT sector." They added, "The S&P 500 return in the first quarter was 10.1%, with IT and communication sectors explaining 5.0 percentage points of this. As of the 20th, the cumulative return for the second quarter is 1.0%, with IT and communication sectors explaining 1.4 percentage points. Unlike the first quarter, when all sectors rose evenly, the concentration of the IT sector leading the market in the U.S. has intensified."

On the other hand, regarding Korea, they said, "There is relatively less burden in approaching the IT sector. While various sectors led the market rise in the first quarter, in the second quarter, industrials, financials, and consumer discretionary sectors led the market increase," emphasizing, "If we look only at the cumulative return for the second quarter, IT is actually recording negative returns, and despite the IT sector's earnings estimates being revised upward the most in the second quarter, the overall market capitalization has decreased."

Furthermore, they added, "The reason why the stock price shows weakness despite the positive performance of the Korean IT sector is that the IT boom lasts about two years and the stock price peak forms 6 to 9 months ahead of the earnings peak," adding, "Although the exact peak timing is unknown, current quarterly earnings are estimated to improve until the end of next year."