AI optimism returns to chip stocks: Strong recovery in Kospi and Wall Street

Chip stocks, which had been under pressure due to concerns regarding the sustainability of artificial intelligence investments, saw a significant recovery in the final trading days of July. According to a report by Sözcü, investors' renewed interest in AI-linked semiconductor manufacturers brought about sharp gains in South Korean and US markets.

South Korea’s technology-heavy Kospi index had fallen a total of 17 percent over the previous three trading days amid concerns over whether AI spending would translate into profitability. The index finished Friday with a gain of approximately 18 percent. Despite this, the Kospi still traded with a loss of about 22 percent for the month of July as a whole.

On Wall Street, chip stocks continued their rally after posting one of their strongest daily performances in a year on Thursday. While the Nasdaq 100 index rose 0.3 percent, Intel shares gained 2.6 percent and Western Digital shares rose 2.1 percent. The Philadelphia Semiconductor Index also rose 1 percent on Friday, extending its jump of over 8 percent from the previous day.

Strong earnings reports from Microsoft and Amazon were influential in shifting the market sentiment. Google, Amazon, and Microsoft’s announcements that growth in their cloud computing units accelerated in the second quarter strengthened expectations that data center and chip investments will continue.

In South Korea, SK Hynix and Samsung Electronics led the rally. SK Hynix shares gained 30 percent on Friday, reducing their weekly loss to 2.3 percent. Samsung Electronics shares rose approximately 27 percent and closed the week up 5.2 percent.

In Japan, the Nikkei 225 index also finished the session with a 4 percent gain after rising as much as 5.4 percent during the day. Purchases in chip and AI-linked stocks, in particular, stood out in the rise.