[Good Morning Market] Weakness in U.S. AI Stocks... KOSPI Expected to Open Lower

On November 12, the KOSPI is expected to open lower due to the weakness of U.S. artificial intelligence (AI) stocks.

The previous day, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 47,927.96, up 559.33 points (1.18%) from the previous session. The S&P 500 index rose 14.18 points (0.21%) to 6,846.61, while the Nasdaq Composite fell 58.87 points (0.25%) to 23,468.30.

In early trading, the New York stock market showed a sluggish trend due to the weakness of major AI-related stocks such as Nvidia (-2.9%) and CoreWeave (-16.3%). However, the market rebounded later on the back of expectations for an end to the U.S. federal government shutdown (temporary suspension of government operations) and the White House's positive economic outlook for the first quarter of 2026 (growth rate of 3-4%).

AI-related stocks are still unable to shake off the "bubble controversy." On the previous day, in addition to the negative news about Nvidia and CoreWeave, renowned investor Michael Burry pointed out that "the depreciation expense of GPUs (graphics processing units) is being underestimated," which further dampened investor sentiment.

Amid these controversies, AI companies face increasing pressure to prove real demand-driven earnings growth and accounting profitability in the future. However, AMD's earnings guidance, announced after the market closed, projected that its data center division sales would grow at an average annual rate of 80% over the next 3 to 5 years. This led to a rise of over 3% in after-hours trading, serving as a positive signal for the market.

The market's attention is focused on Nvidia's earnings, which are scheduled to be released on November 20 (early morning Korea time). Experts advised that until this announcement, investors should be prepared for heightened volatility in AI-related stocks across the board.

On this day, the domestic stock market is expected to see a mixed trend, with declines in major U.S. AI stocks such as Nvidia and Micron, but also optimism over AMD's earnings. As a result, there will likely be differentiated movements among sectors such as semiconductors, shipbuilding, and defense, making the overall direction of the index unclear.

So far this week, the KOSPI has recovered most of last week's sharp losses. Dividend-related sectors, led by semiconductors (November return of 1.8%), utilities (11.0%), insurance (8.5%), and banks (6.9%), have shown strength and driven the index's recovery. In contrast, former leading sectors such as shipbuilding (-11.0%) and machinery (-5.1%) have underperformed, prompting investors to reconsider their positions.

Experts view the price corrections in these sectors as opportunities for gradual accumulation. Historically, a sector is only completely eliminated from market leadership when the KOSPI turns downward or when earnings growth in that sector slows. Currently, however, earnings improvement and government policies to revitalize the stock market are being maintained, suggesting that the upward trend is likely to continue.

Han Jiyoung, a researcher at Kiwoom Securities, stated, "In particular, the shipbuilding and machinery sectors still have clear earnings visibility based on high order backlogs. While the market is likely to continue focusing on the semiconductor sector for the time being, as sector rotation is actively occurring, there will also be profit opportunities in former leading sectors whose valuations have become more attractive."