South Korea's Stock Rout Reveals a Double Threat to the AI Boom
By Huileng Tan
South Korea's Kospi has suffered a sharp reversal after an AI-fueled rally made it the world's best-performing major stock market in the first half of 2026. Jung Yeon-je/AFP/Getty Images
Oct 15, 2026, 10:05 AM GMT+2
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South Korea's stock market is bearing the brunt of a global AI selloff as investors question the sustainability of AI investments and worry about high interest rates.
On Thursday, the benchmark Kospi index ended 8% lower, while Samsung Electronics and SK Hynix, its memory-chip rival, closed 9% and 11% down, respectively.
The plunge followed a tech-led selloff on Wall Street the previous day, triggered by hotter-than-expected US inflation data that revived concerns about higher interest rates.
The selloff rippled across Asia's major AI markets:
- Japan's Nikkei 225 closed 5% lower, with Kioxia, a chipmaker, and SoftBank Group, a tech investor, among the biggest losers.
- Taiwan's Taiex declined 3%, with chipmaking giant TSMC losing 2%.
Investor Doubts
The regional rout comes as investors increasingly question the valuations of AI-linked stocks. Mingyu Kim, an analyst at KB Securities, noted that doubts about the profitability of leading AI companies and their growing reliance on external financing have led to a re-evaluation of chipmaker valuations.
"Concerns over the sustainability of AI investment beyond the next 12 months have prompted the market to revert to valuing semiconductor stocks as commodity-driven cyclicals," Kim wrote on Wednesday.
Even robust earnings have failed to reassure investors. Last Thursday, Samsung Electronics forecast a nearly ninefold increase in third-quarter operating profit, but its shares continued to decline.
The Bigger Picture
This market shift underscores the double threat to the AI boom:
- Valuation Concerns: Investors are questioning the high valuations of AI-related stocks, even as earnings prospects remain solid.
- Interest Rate Impact: Persistent high interest rates are making the boom more expensive to sustain.
The current market dynamics highlight the need for AI companies to demonstrate long-term profitability and sustainable growth to maintain investor confidence.