[Good Morning Market] AI Investment Burden Spreads... "Korean Stocks Expected to Open Lower"

With the New York stock market declining, led by major technology stocks, on concerns about overheating in artificial intelligence (AI) investments, the Korean stock market is also expected to open lower on the 6th, with corrections centered on AI-related tech stocks.

On the 5th (local time), the Dow Jones Industrial Average, a blue-chip index on the New York Stock Exchange, closed at 48,908.72, down 592.58 points (1.2%) from the previous trading day. The S&P 500 Index, which is centered on large-cap stocks, ended the session at 6,798.4, down 84.32 points (1.23%). The tech-heavy Nasdaq Composite Index finished at 22,540.586, slipping 363.993 points (1.59%).

The Dow Jones Industrial Average is displayed on an electronic display board at the New York Stock Exchange in the United States. Reuters, Yonhap News

As global risk appetite contracted sharply, a correction continued, centered on AI technology stocks.

Alphabet (Google's parent company) projected that it would increase capital expenditures to as much as 185 billion dollars this year, after which its share price fell 0.54%. Microsoft (MS) plunged 4.95% as concerns mounted both over AI facility investments and sluggish cloud services. Amazon, which closed down 4.42%, is falling by nearly 10% in after-hours trading. Nvidia dropped 1.33%, and Palantir fell 6.83%. Among software names, ServiceNow and Salesforce also declined 7.6% and 4.75%, respectively.

The Korean stock market is also expected to start lower today. Lee Sunghoon, a researcher at Kiwoom Securities, said, "With risk appetite weakening across global markets, corrections led by U.S. AI technology stocks will be reflected," adding, "since bargain-hunting sentiment still remains, the market is likely to see repeated intraday ups and downs, resulting in a highly volatile session."

He said, "The existing upward drivers of the domestic stock market, such as the earnings upcycle led by semiconductors and ample market liquidity, remain intact," and added, "However, the burden from gains of over 20% at the beginning of the year has accumulated, and investor sentiment in global asset markets is currently deteriorating. In the short term, the Korean equity market is also in a phase where it must digest heightened volatility."

The researcher added, "Foreign investors have been taking profits mainly in Korea's leading export stocks such as semiconductors and automobiles, which have seen large gains so far," and continued, "In contrast, domestically oriented and inbound-related stocks have been showing relatively solid share price performance, so in the short term, investors need to respond to portfolio volatility by focusing on these sectors."