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

The Korean Stock Exchange’s KOSPI index plummeted over 3% on Friday, driven by losses in American technology equities and apprehensions surrounding the profitability of artificial intelligence (AI) investments. The main index closed at 5,730.74, down 206.92 points, or 3.48%, after opening 2.99% lower at 5,760.35. This significant sell-off sparked a sell-side sidecar at around 10:05 a.m., briefly suspending automatic sell orders for the first time in 11 trading days following a 7.57% drop on October 15.

Samsung Electronics and SK hynix, two key chipmakers, were among the hardest-hit stocks. Samsung Electronics saw a 3.02% decline, while SK hynix fell 7.08%. The market reaction followed earnings releases from major U.S. technology companies, which fueled doubts about the returns on their substantial AI investments.

Alphabet, the parent company of Google, disclosed weaker-than-expected results and a widening free cash flow deficit. Similarly, Amazon's earnings and guidance disappointed analysts, putting a spotlight on the expenses associated with expanding AI infrastructure. Notably, the three major U.S. indexes also experienced declines during the session.