[Good Morning Market] AI Stocks Fall on Broadcom Pessimism... KOSPI Expected to Open Lower

On December 15, the KOSPI is expected to open lower, influenced by growing concerns over artificial intelligence (AI) in the U.S. stock market.

On December 12 (local time), the Dow Jones Industrial Average on the New York Stock Exchange (NYSE) closed at 48,458.05, down 245.96 points (0.51%) from the previous session. The S&P 500 Index fell by 73.59 points (1.07%) to 6,827.41, and the Nasdaq Composite Index plummeted by 398.69 points (1.69%) to 23,195.17.

Pessimistic remarks about the AI industry from Broadcom weighed on the market. Broadcom CEO Hock Tan stated during a briefing following the previous day's earnings announcement, "The outlook for non-AI revenue in the first quarter is unchanged from the same period last year," but also noted, "Rapidly growing AI revenue has a lower overall margin than non-AI revenue." This was interpreted as a sign that the AI industry may not be as profitable as previously thought.

Oracle also faced additional downward pressure after reports that the completion of its data center for OpenAI could be delayed by about a year. Although the company officially denied these reports, existing concerns remain unresolved, such as a negative free cash flow of $12 billion over the past 12 months and uncertainty over the monetization of its remaining performance obligations (RPO) amounting to $523 billion.

The December Federal Open Market Committee (FOMC) meeting provided the market with temporary relief, but just one day after the meeting ended, macroeconomic pressures have intensified once again. Policy uncertainty within the U.S. Federal Reserve (Fed) and volatility in AI-related stocks are both contributing to heightened tension in financial markets.

Some Fed officials have stated that a rate freeze is necessary for the time being due to uncertainty over the inflation trajectory. The ongoing lack of consensus within the Fed regarding the direction of monetary policy, even after the FOMC, has been identified as a factor increasing market anxiety.

Additionally, President Donald Trump has mentioned the hawkish former Fed Governor Kevin Warsh as a potential candidate for the next Fed Chair, further fueling confusion over Fed appointments and contributing to increased volatility in the U.S. stock market.

Market participants believe that, following last week's major events-the December FOMC and the earnings announcements from Oracle and Broadcom-the stock market has already entered a phase of heightened volatility. There are expectations that this week, as key economic indicators and events are digested, the market may undergo further adjustments in its direction.

This week, the domestic stock market is expected to experience a volatile session due to the sharp decline in U.S. AI stocks, the possibility of a U.S. rate freeze, and the upcoming earnings announcement from Micron.

Han Jiyoung, a researcher at Kiwoom Securities, analyzed, "In particular, this week's earnings from Micron in the U.S. will have a significant impact not only on U.S. AI stocks but also on the share prices of domestic semiconductor companies," adding, "From the middle of the week, we are likely to see a wait-and-see attitude in the market as investors anticipate these earnings events."