[Edaily Reporter Park Sun-Yeop ] The artificial intelligence (AI) rally is set to face a test as the earnings season gets into full swing. For U.S. Big Tech companies, the key will be confirming cash flow and productivity improvements that can justify their massive capital expenditures (CAPEX), while for the South Korean stock market, the key variable is whether the pace of upward revisions to earnings estimates—centered on semiconductors—will continue. Although volatility in semiconductor stocks has recently increased, some analysts suggest this should be viewed as a process of profit-taking and the unwinding of concentrated positions following a sharp rally, rather than a sign of deteriorating fundamentals.
Kwon Soon-ho, an analyst at DaishinSecurities, stated in a report on the 8th, “The points at which the U.S. and South Korean stock markets react most sensitively differ during the AI expansion cycle,” adding, “For U.S. hyperscalers, the key is securing the justification for capital expenditures, while for South Korea, it is the pace of earnings growth in beneficiary sectors, including semiconductors.”

Analyst Kwon viewed the difference between the two markets as stemming from the differences in the investment factors that drove past performance. He explained that in the South Korean stock market, stock returns tended to be strongly influenced by how rapidly companies’ projected accounting operating profits grew. In contrast, in the U.S. stock market, the ability to generate free cash flow relative to invested capital was a major driver of long-term performance.
Consequently, during this U.S. earnings season, it has become crucial to determine whether increased AI investment is actually leading to improvements in profitability and productivity. Analyst Kwon noted, “There are no signs yet that U.S. companies are scaling back their CAPEX plans,” adding, “Funding sources are expanding to include retained earnings, rights offerings, and even long-term debt.” Given the ongoing burden of massive investments, investors are seeking to determine whether AI investments will remain merely a cost or lead to increased revenue and productivity.
In fact, during U.S. corporate earnings calls, the focus of AI-related comments remains on investment, costs, and revenue. An analysis by DaishinSecurities of 6,800 U.S. corporate earnings calls from 2023 through the first quarter of 2026 found that mentions of productivity in the first quarter of this year totaled 891, a 1.7-fold increase from the 519 mentions in the same period last year. However, only 7% of these productivity-related remarks were accompanied by specific figures, leading to the assessment that there is still limited evidence for investors to verify through simple arithmetic.
It is also judged that the outlook surrounding memory semiconductors cannot be viewed simply as concerns over a “peak-out.” The proportion of earnings calls in non-IT sectors that mentioned memory chips rose approximately threefold, from 3.7% in the third quarter of 2024 to 10.5% in the first quarter of this year. DaishinSecurities interprets this as a sign that rising memory prices are becoming a cost burden for U.S. companies, while also indicating the intensity of the supply shortage cycle.
The domestic stock market has focused on the fact that earnings outlooks themselves continue to trend upward. The proportion of stocks with 12-month forward operating profit estimates higher than three months ago stood at 78%, surpassing the peak of past upward revision cycles. However, analysts noted that as the gap in earnings outlook improvements between the memory sector and demand-driven sectors narrows, a partial rotation has recently emerged toward sectors with high earnings visibility and low duration, such as retail, banking, and cosmetics.
Regarding recent stock market fluctuations, Analyst Kwon assessed them as “a side effect following the sharp rise in the fundamental outlook.” He explained that since the weight of SamsungElectronics(005930)and SK hynix(000660)in the KOSPI has increased significantly, and given that supply and demand have been concentrated in the semiconductor sector, even profit-taking and portfolio rebalancing alone can lead to significant volatility.
He stated, “While sensitivity to memory costs and the justification for CAPEX has increased, this also demonstrates the intensity of the supply shortage cycle,” adding, “Fundamentals, such as earnings estimates, continue to trend upward, so it is too early to worry about a peak-out in the overall stock market.” He further noted, “When stocks are undervalued relative to their earnings levels, it is effective to view increased volatility as an opportunity to accumulate positions.”