KOSPI falls 3.48% as US tech earnings fuel AI investment concerns

The Korean Stock Exchange KOSPI experienced a significant decline of over 3% on Friday, driven by losses in U.S. technology stocks and growing concerns surrounding the returns on artificial intelligence investments, according to recent reports. The index closed at 5,730.74, marking a loss of 206.92 points or 3.48% from its opening value of 5,760.35.

This sharp downturn triggered a sell-side sidecar at approximately 10:05 a.m., temporarily suspending program sell orders – the first instance in the past 11 trading sessions since KOSPI's previous substantial drop of 7.57% on October 15.

Among the affected major players, Samsung Electronics witnessed a 3.02% decrease, while SK hynix suffered a steeper 7.08% decline. These losses followed earnings releases from prominent U.S. technology firms, which raised further doubts about the profitability of their substantial AI investments. Alphabet, the parent company of Google, reported weaker-than-anticipated outcomes and a broader free cash flow deficit.

Similarly, Amazon's earnings and guidance fell short of market expectations, highlighting the financial burdens associated with scaling AI infrastructure.

The repercussions of these developments extended to Wall Street's three major indexes, underscoring the broader implications of the tech sector's performance on global financial markets.