Is the AI Supercycle Ending? Markets Watch 3 Warning Signs

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based customized news recommendation and summarization service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. How the AI Supercycle Ends

- Key Summary: After domestic stock markets including semiconductors plunged in June and July, concerns are growing over how the AI supercycle will conclude. The first path is an oversupply form similar to the 1999 dot-com bubble, with data center vacancy rates and declining graphics processing unit (GPU) rental prices cited as judgment indicators. The second is an interest rate and demand slowdown path like 2022, in which big tech's investment growth rate significantly exceeds its revenue growth rate, widening the gap. The third is a financing risk similar to the 2008 financial crisis, with debt and corporate bond issuance by major big tech firms such as Oracle rising rapidly.

2. SK hynix More Sensitive to Semiconductor Correction... Market Cap at 87% of Samsung

- Key Summary: SK hynix's market capitalization has shrunk to 87.1% of Samsung Electronics' amid the semiconductor sector correction this month. The ratio, which reached 100.7% on the 22nd of last month, retreated to around 90% this month, then to 85.6%, before rebounding slightly to 87.1% on this day. Compared to their record highs, Samsung Electronics and SK hynix shares fell 29.1% and 37.7% respectively, with SK hynix's decline far larger. Accordingly, SK hynix's second-quarter earnings release on the 29th and Samsung Electronics' on the 30th, along with long-term agreements (LTA) and high-bandwidth memory (HBM) shipment forecasts, are expected to be a watershed for future stock prices.

3. Mixed Fortunes for U.S. Index ETFs Amid Won Strength... Currency-Hedged Types Outperform

- Key Summary: As the won-dollar exchange rate turned lower, returns on domestically listed exchange-traded funds (ETFs) tracking U.S. indices diverged depending on whether they were currency-hedged. This month, the currency-exposed 'TIGER US S&P500' fell 4.17%, while the currency-hedged type rose 0.29%, a difference of 4.46 percentage points. For products tracking the Nasdaq 100, the currency-exposed type fell in the 9% range while the currency-hedged type declined only in the 4% range, widening the gap further. Meanwhile, the won-dollar exchange rate rose to 1,555.8 won on the 2nd of this month before falling to 1,468.5 won on this day, with currency exchange demand from SK hynix's American depositary receipt (ADR) listing and a shift to net buying by foreign investors cited as the background for won strength.

4. Naver Secures GPUs and Investment Funds Simultaneously... Moves to Preempt Global AI Factory Market

- Key Summary: Naver has partnered with Nvidia and Brookfield to build an AI infrastructure cooperation framework totaling 10 billion dollars (about 14.6 trillion won). For the first time since its transfer listing to the KOSPI in 2008, it carried out a third-party allotment capital increase, ceding a 4.5% stake to Nvidia, and signed a 9 billion dollar infrastructure financing agreement with Brookfield. Naver is assessed to have 'full-stack AI' capabilities, operating a graphics processing unit (GPU) cluster of around 100,000 units and even providing GPU-as-a-service (GPUaaS). Based on this, it plans to run a 55-megawatt (MW) AI factory on a pilot basis in the first half of 2027, then expand to 200 megawatts in 2028 and subsequently to the 1-gigawatt (GW) class.

5. As Chips Grow More Complex, 'Testing' Rises... Ilhak-gaemi Flock to Back-End Materials, Parts and Equipment

- Key Summary: 'Testing,' a back-end process, is emerging as the next bottleneck in the AI semiconductor ecosystem. Nomura Securities forecast that the final test time for Nvidia's Blackwell will increase fourfold compared to the previous-generation Hopper (H100), and the next-generation Rubin will increase sevenfold, with testing's share of GPU manufacturing costs growing from 1.9% to 3.3%. Accordingly, buy recommendations were issued for testing companies such as Taiwan's ASE, Hon Precision, and Chroma, and domestic investors are shifting funds to Japanese testing-related stocks, which offer relatively higher investment convenience. Over the past month, the top net purchase in Japanese stocks by individual investors was Advantest (7.76 million dollars), a semiconductor test equipment company, while probe card producers Japan Electronic Materials (JEM) and Arisawa Manufacturing also ranked among the top net purchases.

6. Did the 'Conservative Diversified Investment' Strategy Work?... 'Didim Funds' Smile in Volatile Markets

- Key Summary: Among the 'Didim Funds,' pension-specialized asset allocation funds promoted by the Korea Financial Investment Association, 30% outperformed the KOSPI index's gains over the past three months. The 'HDC Didim Moa-jugo Makka-juneun Securities Investment Trust 1 (Bond Mixed),' which recorded the highest return, returned 7.02%, more than double the KOSPI's gain (3.3%) over the same period. Of a total of 25 Didim Funds, 7 (28%) outperformed the KOSPI's gain, and no products recorded a negative return during this period. This product is composed of 62.54% bonds and 17.11% stocks, and securities analysts said that the stock-bond diversified investment approach was effective in defending returns in volatile markets.