AI Stocks Could Face Pressure Despite Industry Growth
By Hyunjoo Jin
SEOUL, Dec 5 (Reuters) – Artificial intelligence stocks may be at risk of experiencing a correction after experiencing rapid and excessive growth, according to the head of a South Korean conglomerate that owns leading memory chipmaker SK Hynix.
While concerns about inflated AI stock valuations have started to impact financial markets, there is uncertainty surrounding when substantial investments in AI will translate into tangible profits.
During a forum in Seoul, SK Group chairman Chey Tae-won addressed concerns raised by the Bank of Korea governor regarding potential AI bubbles, stating, “I don’t see a bubble in the AI industry.”
Chey acknowledged that stock markets have experienced significant growth that may not align with the fundamental value of AI stocks, suggesting that a period of correction may be necessary.
Despite the potential for stock market corrections, Chey emphasized that overshot valuations are common in a growing industry like AI, and the advancements in AI technology are expected to yield substantial productivity gains.
SK Hynix, a key supplier of memory chips for Nvidia’s AI chipsets, has seen its stock surge 214% in the past year due to strong demand from AI data center developers investing heavily in the industry.
In October, the South Korean company reported record quarterly profits driven by the AI boom, with all chip production for the following year already sold out, indicating an extended chip “super cycle.”
(Reporting by Hyunjoo Jin; Editing by Miyoung Kim and Jane Merriman)
