CoreWeave demand and financing confidence ease AI concerns
Semiconductor surge and 6.19% rise in MSCI Korea index; forced selling declines
Key Market Trends
① CoreWeave confirms AI demand, triggering short-covering
U.S. markets rose, bolstered by CoreWeave’s earnings and a rebound in Nvidia. Of the 11 major sectors, 10 posted gains—excluding consumer discretionary—with technology, energy, and industrials leading the rally. Analysts noted that strong short-covering flowed into tech stocks that had recently suffered significant losses.
CoreWeave reported earnings that beat market expectations and provided a 2024 revenue guidance of $13 billion to $13.3 billion, surpassing the consensus estimate of $12.8 billion. Its order backlog reached approximately $133 billion, up 138% year-on-year and 27% quarter-on-quarter.
The company also expressed confidence in addressing recent market concerns regarding financing. It stated that $9 billion in prepayments and deposits had been received over the past three months, with plans to pursue asset-based financing within the next two weeks. It further clarified that it has no plans for high-interest financing through next year.
Demand remains robust, with orders significantly exceeding supply capacity for 2027 and demand outpacing supply for 2028. Other Neo-Cloud stocks, including Nebius and IREN, also saw gains.
② Strong semiconductor rebound; bargain hunting for Nvidia
As AI investment concerns eased, semiconductor stocks surged. SanDisk, Micron, and Seagate rose by more than 10%, while SK hynix ADR and Marvell Technology also saw gains of around 10%.
Bargain hunting emerged for Nvidia, which had recently plummeted following reports regarding its CEO. The market recognized that the recent sell-off was excessive, as the actual business impact and the possibility of management changes remain unconfirmed.
However, some skepticism remains. Certain brokerage firms suggested a cautious approach until visibility on data center business, China export restrictions, and CEO-related uncertainties are resolved.
Conversely, the order and financing situation demonstrated by CoreWeave contrasts with recent market fears that AI infrastructure demand has sharply contracted. The market, which had previously sold off AI stocks indiscriminately, is beginning to differentiate based on individual company performance and actual demand.
③ Interest rates remain a burden; CPI impact persists
While AI sentiment has improved, interest rates remain a variable. Following a higher-than-expected CPI, hawkish comments from Federal Reserve officials continue. Goolsbee noted that inflation remains a serious issue, and some investment banks have raised the possibility of further rate hikes.
Conversely, some view the probability of a 0.5 percentage point hike as low. The bond market was closed for Veterans Day, limiting new price signals regarding interest rates.
International oil prices rose slightly as tensions involving Iran resurfaced, though gains were capped by reports of potential negotiations between the U.S. and Iran.
Market Analyst Perspective
The shift in this week's market is less about an increase in positive news and more about a reduction in the selling pressure that caused the recent crash. Foreign investors have been net buyers for two consecutive days, signaling an exit from the recent period of massive net selling.
The scale of leverage and inverse ETFs has also decreased. As the size of these products shrinks, the potential for mechanical forced selling during market downturns is likely to diminish. It is estimated that a significant portion of hedge fund position reduction has already occurred.
Domestic credit balances have also fallen by over 7 trillion won in the past month. On a trading-day basis, this represents an average daily reduction of 300 billion won, indicating that panic selling has been largely cleared from the market.
While the market will not stabilize immediately, the phase where every piece of bad news triggered a sell-off is shifting to one where buying interest responds to oversold conditions.
The MSCI Korea Index rose 6.19%, and overnight futures gained 1.96%. Given the significant rebound over the past two days, the focus today will be on whether foreign buying in semiconductors continues for a third day and whether Samsung Electronics and SK hynix can maintain their recent recovery.
Today's Checkpoints
- Foreign Investors: Whether net buying in semiconductors continues after two consecutive days.
- Semiconductors: Whether the surge in U.S. memory and AI stocks translates to Samsung Electronics and SK hynix.
- Supply/Demand: The impact of reduced forced selling from hedge funds, leverage, and credit.
- AI: Whether CoreWeave’s demand confirmation further lowers data center concerns.
- Interest Rates: Whether Fed hawkishness following the CPI continues to pressure tech stocks.
