[Edaily Reporter Shin Ha-yeon ] The New York stock market plummeted, led by tech stocks, as concerns over cost burdens and profitability stemming from expanded artificial intelligence (AI) investments resurfaced. Although Meta’s earnings exceeded market expectations, it became apparent that massive AI investments were putting pressure on cash flow, fueling widespread caution regarding the sustainability of the AI investment race. Additionally, international oil prices soared to a five-month high amid escalating tensions in the Middle East, further heightening concerns over inflation and interest rates. Here are the key news stories to watch before the market opens on the 23rd.

◇ AI Concerns Reignite… Nasdaq Plunges 2.58%
- On the 22nd (local time), the Dow Jones Industrial Average, which tracks blue-chip stocks, closed at 52,867.98, up 11.89 points (0.02%). The S&P 500 Index, a benchmark for large-cap stocks, closed at 7,663.43, down 93.74 points (1.21%) from the previous session. The tech-heavy Nasdaq Composite Index plummeted 694.00 points (2.60%) to 26,008.86, marking its largest single-day drop since last June.
- This was driven by growing concerns, based on recent corporate earnings reports, that AI-related spending is beginning to put pressure on actual cash flow and profitability. Risk-averse sentiment spread across the broader market as selling pressure concentrated on tech and semiconductor stocks, which had driven the recent stock market rally.
-While 83% of the 111 S&P 500 companies that reported third-quarter earnings this year beat market expectations, investors appear to be reacting more sensitively to AI investment costs and financing burdens than to earnings figures alone.

◇Meta Plummets Over 6%… “How Much More Will They Spend on AI?”
- Meta’s stock closed down 6.98% despite third-quarter earnings exceeding market expectations. The company raised the lower end of its capital expenditure (CapEx) forecast for this year from $130 billion to $135 billion, projecting a range of $135 billion to $145 billion.
-Third-quarter free cash flow posted a deficit of $2.12 billion, marking the first time since 2012 that cash flow turned negative. The company also announced plans to issue non-voting shares to fund AI investments, adding to concerns about potential future dilution of shareholders’ stakes.
-Meta’s 5-year credit default swap (CDS) premium rose 7.6 basis points (1 bp = 0.01 percentage point) in a single day to 114.79 bp, hitting an all-time high. Market concerns over the burden of AI investments appear to be spreading beyond the stock market into the credit market.

◇ Semiconductor Stocks See Widespread Sell-off… SOX Down 25% From June High
-Concerns over the burden of AI investment costs have spread to semiconductor stocks, causing the Philadelphia Semiconductor Index to plummet. It has fallen to a level approximately 25% below its all-time closing high recorded on June 22. However, it still maintains a return significantly outpacing the S&P 500 since the beginning of the year.
-Major semiconductor stocks such as Western Digital, Intel, SanDisk, and Marvell all fell sharply. As credit risk indicators for major AI investors—including not only Meta but also Oracle and Amazon—have risen, the market’s expectations regarding AI infrastructure investments appear to have become even more stringent.
-As the semiconductor sector—which had recently been regarded as the biggest beneficiary of expanding AI-related investments—undergoes another correction, this could weigh on the stock prices of major domestic semiconductor stocks such as SamsungElectronics(005930)and SK hynix(000660) today.

◇Tensions in the Middle East Flare Up Again… Brent Crude Jumps 4% to $113
-International oil prices surged as tensions in the Middle East flared up again. December-delivery Brent crude closed at $113.17 per barrel, up $4.35 (4.0%) from the previous session, while U.S. West Texas Intermediate (WTI) crude rose $2.32 (2.4%) to $99.47. This marks the highest closing price for Brent crude in about five months, since May 4.
- Concerns over supply disruptions grew as Yemen’s Houthi rebels attacked Saudi Arabian infrastructure. Saudi Aramco reportedly ordered employees at its Dammam headquarters to evacuate.
- The Iranian Revolutionary Guard Corps (IRGC) Navy also stated that seven ships in the Persian Gulf had been damaged by attacks or mine strikes and warned the U.S. that it could expand its response to include U.S. military bases in the region in the event of further provocations.
-The prospect that a sharp rise in oil prices could reignite inflation—thereby increasing the likelihood of further interest rate hikes by the Federal Reserve (Fed)—is also weighing on the stock market.

◇ U.S. Job Market Remains Strong… 194,000 New Unemployment Claims
-According to the U.S. Department of Labor, initial jobless claims for the week ending the 17th fell by 6,000 from the previous week to 194,000. This figure also fell short of the market forecast of 200,000. With claims remaining below 200,000 for six consecutive weeks, they have remained at their lowest levels in approximately 57 years, since 1969.
- Continuing unemployment claims rose slightly to 1,728,000. Analysts interpret this as a continuation of the “low layoffs, low hiring” trend, where while new layoffs remain very low, the pace of re-employment is also slow.
-While a robust labor market helps alleviate concerns about a recession, from the Fed’s perspective, it could also be interpreted as providing more room for additional tightening to curb inflation.

◇SamsungElectroMechanics to Receive 3.7 Trillion Won Investment from NVIDIA and Tesla?
- Reports have emerged that SamsungElectroMechanics is set to receive a total investment of 3.7 trillion won from NVIDIA and Tesla to build production facilities for high-value-added FC-BGA substrates used in AI semiconductors. Reuters also reported, citing domestic media, that a plan is underway for NVIDIA to invest 2.6 trillion won and Tesla to invest 1.1 trillion won.
-It is understood that the production line will be built in Sejong, and the company will supply FC-BGA for AI semiconductors through long-term supply contracts.
-Given that this is a piece of positive news for individual companies amid last night’s sharp decline in U.S. semiconductor stocks, attention is expected to focus today on the stock performance of SamsungElectroMechanics and domestic semiconductor substrate, materials, and components stocks.

◇SpaceX and Tesla Considering Merger… Will a $3.5 Trillion “Giant” Be Born?
-Following Elon Musk’s statement that a merger between SpaceX and Tesla is a “good idea,” it is reported that committees from both companies are reviewing the feasibility of an actual merger. If the merger materializes, the combined market capitalization would reach approximately $3.5 trillion, potentially making it the largest corporate merger in history.
-However, analysts suggest that if SpaceX—a key U.S. defense and aerospace company—and Tesla—which has a significant presence in China—were to merge, it could spark national security concerns and political controversy in both the U.S. and China.
-Since South Korea also views the automotive and aerospace sectors as strategic industries, there is speculation that any merger push could be subject to an in-depth review by domestic competition authorities. Reuters reported that an official from South Korea’s Fair Trade Commission also indicated that the agency could closely examine the impact on the domestic industry should the deal proceed.

◇ Reports that SK hynix has withdrawn Solidigm’s U.S. IPO… Burden of dual-listing controversy
- SK hynix has decided to withdraw the U.S. initial public offering (IPO) plans for its U.S. subsidiary, Solidigm. Consequently, Solidigm’s pre-IPO fundraising efforts, which were being pursued in conjunction with the listing, have also been suspended.
- In a regulatory filing released this morning, SK hynix stated, “Solidigm, our overseas subsidiary, has been reviewing various funding options to expand production capacity and strengthen competitiveness; however, after comprehensively considering capital market conditions and other factors, we have decided to suspend our review of the pre-IPO and initial public offering (IPO).”
-Solidigm is a U.S.-based subsidiary established when SK hynix acquired Intel’s NAND flash and SSD businesses in 2021; it has recently sparked controversy in South Korea over “dual listings.” Financial authorities have indicated that Solidigm’s overseas listing could also be subject to domestic dual-listing guidelines, while concerns have been raised among politicians and shareholders regarding the dilution of existing SK hynix shareholders’ equity value and the dispersion of profits.