AI and Semiconductor Stocks Rebound; U.S. Semiconductor Index Jumps Over 2%
Market Eyes Relief from Midterm Election Uncertainty; Focus Shifts to Domestic Tech Liquidity
Key Market Trends
① AI Stocks Rebound; Semiconductors Climb Over 2%
U.S. markets benefited from a recovery in tech stocks and a decline in international oil prices, though sector performance remained mixed. Technology, industrials, communication services, and real estate sectors saw gains, while materials, consumer staples, and energy lagged.
AI-related stocks, which had suffered significant recent losses, saw an influx of bargain hunting. The semiconductor index rallied more than 2%, leading the Nasdaq, with Nvidia rising over 2% to reclaim its position as the world's most valuable company. Microsoft, Amazon, and Meta also gained roughly 2%, while AMD, Super Micro Computer, Oracle, and CoreWeave showed strength.
Semiconductor stocks had previously plummeted 22% from their October 6th peak, falling below their 200-day moving average. The recent rally reflects a consensus that the decline—driven by recurring concerns over AI capital expenditures and financing—was excessive.
② AI Investment Concerns Persist: Sustained Spending vs. Growth
Doubts regarding AI investment have not been fully resolved. Reports suggest that the valuation of Anthropic’s upcoming IPO could be scaled back from the initially discussed $2 trillion to between $1.5 trillion and $1.6 trillion.
Market focus is shifting from AI demand toward the sustainability of massive infrastructure investments. While hyperscalers hold an order backlog of approximately $2.5 trillion, analysts note that improving cash flow will take time.
Bank of America suggests that even if infrastructure spending slows, if AI demand remains robust, the investment cycle may not end but rather transition into a more prolonged phase. Much of the recent sell-off in semiconductor stocks appears to have already priced in the fear of a near-term end to the investment cycle.
③ Midterm Elections: Markets Begin Looking Toward the ‘Aftermath’
As the U.S. midterm elections proceed, the market is turning its attention to the potential for reduced uncertainty once the results are finalized.
Historical trends are compelling. According to Carson Group, the S&P 500 has risen in all 19 of the six-month periods following recent midterm elections. Deutsche Bank data also indicates that, on average, the stock market gains 7% in the fourth quarter of midterm election years.
Semiconductors have also historically performed well post-election. Data tracked by Yahoo shows that in every instance since 1994, the semiconductor sector rose between November of the midterm year and June of the following year, with an average gain of 22%.
While past performance does not guarantee future results, variables such as AI capital spending, interest rates, and data center policies suggest that volatility could persist even after election results are announced.
Editor’s Outlook
The market has recently exhibited unusually high volatility, with an average swing of 2.8% between gains and losses over the last 13 trading sessions. The combination of concerns over AI finances and the U.S. political calendar has left prices highly sensitive to even minor news.
Liquidity shifts related to major upcoming IPOs, such as Anthropic, remain a factor to monitor, as historical precedents show that capital moving out of the equity market for private firm listings can impact liquidity.
Domestic Korean markets reacted more severely to AI fears yesterday than the U.S. markets. However, with U.S. semiconductor stocks rebounding over 2% overnight, and the MSCI Korea Index and overnight futures rising 2.27% and 1.70% respectively, we should watch how effectively the market recovers from yesterday's losses, particularly within the semiconductor sector.
In the mid-to-long term, concerns regarding "peak earnings" have largely been priced in. While it is too early to declare a definitive floor, investors should distinguish between price and liquidity for sector leaders that have seen significant declines despite proven performance.
Today’s Checkpoints
Semiconductors: Monitoring the response of Samsung Electronics and SK hynix following the 2%+ rebound in the U.S. semiconductor index.
Midterm Elections: Assessing potential volatility in U.S. tech stocks during the finalization of election results.
Liquidity: Whether foreign and institutional investors return to buying previous market leaders.
AI Investment: Distinguishing between financing concerns and actual demand for semiconductors and cloud infrastructure.
Oil Prices: Potential for further declines depending on U.S.-Iran negotiations.
Disclaimer: This report is a reconstruction of a telegram post by "Sihwangman" (Market Man). All content is for informational purposes only and does not constitute investment advice, nor should it be used as a basis for buying or selling securities.
