"This" Shaking Up U.S. Stocks... Overcoming Even AI Fears [Weekend Money]

U.S. inflation data underpin optimistic market outlook
Daishin Securities: "Upward trend at least through March"

Concerns are mounting over the U.S. stock market. Fears are spreading that rapidly advancing artificial intelligence (AI) technologies could erode the entire existing software industry, causing sharp volatility in the share prices of related stocks and companies.

However, alongside the view that this AI-driven fear is "exaggerated," there are also counterarguments that the future direction of the U.S. stock market will ultimately be upward. The basis for this optimism is, above all, inflation indicators.

On the 21st, Moon Namjung, a researcher at Daishin Securities, wrote in a report titled "Inflation Indicators (CPI, PCE, PPI) Reviving the U.S. Stock Market & AI Optimism" that "after the January CPI was confirmed, the U.S. stock market began reacting more to macro (inflation) variables than to industry (AI) variables." As inflation indicators have come in better than expected, he projected that there is room for the U.S. stock market to rise.

Gradually Reviving Expectations for Rate Cuts

In fact, the January Consumer Price Index (CPI) came in lower than expected. CPI is the inflation that consumers actually feel. Gasoline prices, housing costs, and food prices are all included here. Despite it being the winter season (December to February), energy prices remained stable, and the increase in some components was limited, which was interpreted positively.

Market attention is now shifting to the Personal Consumption Expenditures Price Index (PCE) and the Producer Price Index (PPI). Researcher Moon projected, "If the December PCE and the January PPI both come in below expectations, the Federal Reserve's rate-cut path could become clearer."

Interest rates are always a key variable. At the moment, the market appears to welcome "price stability" more than a slight economic slowdown. If inflation falls without the economy collapsing, the Federal Reserve can cut rates without much burden. In fact, some analyses suggest that the market has already priced in a significant likelihood of a rate cut in June.

Rate-Cut Hopes Shrinking Discount Rates, Lifting AI Stocks

U.S. Manufacturing & Services PMI. Screenshot of Daishin Securities report

Together with Fed rate cuts, the market is also expecting the effect of lower discount rates. The discount rate is the rate applied when calculating the present value of a stock. When converting money to be earned in the future into present value, a certain amount is shaved off to account for time and risk, and the standard for that haircut is the discount rate.

For example, if there is a company that will earn 1 million won five years from now, that 1 million won is not treated as equivalent to 1 million won today. When interest rates are high, you discount it heavily; when interest rates are low, you discount it less.

As expectations for rate cuts grow, discount rates shrink, which in turn raises the value of future earnings. In other words, it creates a favorable environment for growth stocks. (Rising interest rates have the exact opposite effect.)

AI-related companies are those whose value is driven more by expectations about "money they will earn in the future" than by current profits. The lower the discount rate, the higher the relative valuation of such companies becomes.

Researcher Moon stressed, "As expectations for Fed rate cuts and lower discount rates re-emerge, optimistic views on the U.S. stock market and AI technology companies will spread."

Separate from the actual competitiveness of AI technologies and services, the expectation that an environment could form in which AI can be valued at a premium is effectively supporting share prices.

Upward at Least Through March... But Risks Remain

Q1 2026 Investment Preferences by Country. Daishin Securities

Researcher Moon forecast that "in the short term, the upward trend in the U.S. stock market will continue at least through March."

However, the preconditions are clear. The pace of inflation must continue to slow. And the Federal Reserve must actually move to cut rates.

If inflation flares up again, discount rates are highly likely to rise once more. At that point, growth stocks will be the first to come under pressure. AI optimism could also be shaken again.

Looking at past patterns, the first quarter, especially up to March, has tended to show relatively strong performance. During the Lunar New Year holiday periods in Korea from 2021 to 2025, the U.S. stock market (S&P 500) rose by an average of 1.1%. In addition, employment remains solid, while inflation is showing signs of slowing. The economic situation is being assessed as one that does not undermine financial market price indicators.

Researcher Moon maintained an "overweight" view on the U.S. stock market and AI-related industries. Sectors linked to AI infrastructure, such as IT, semiconductors, materials, and industrials, were mentioned together. This is because AI inherently involves investments in data centers, power infrastructure, and semiconductors. From this perspective, it is not a single industry but a chain investment cycle.

As the report notes, it is difficult to say definitively whether the period after the Lunar New Year holidays will be "a good opportunity to invest in the United States and the AI revolution" or the beginning of a long correction phase. The next few inflation indicators could provide important clues.