South Korea’s stock market surged sharply on Thursday, led by a strong rebound in semiconductor shares following a challenging month marked by significant losses in the sector globally. The Kospi index climbed nearly 18 percent in a single day, recovering from a steep three-day decline of 17 percent driven by investor concerns about the sustainability of artificial intelligence (AI)-related growth. Despite Thursday’s rally, the Kospi remains down approximately 22 percent for the month of July.
Globally, semiconductor stocks experienced a notable sell-off earlier in the month, with valuations falling by trillions of dollars amid apprehensions that the rapid surge in AI demand could falter. Estimates of total market value wiped out range widely, with some figures citing losses between $3 trillion and $7 trillion, reflecting volatility in different markets and indexes. The Philadelphia Semiconductor Index, which tracks chipmakers listed on U.S. exchanges, rose by 0.5 percent Thursday, building on an 8 percent gain seen the previous day.
The rebound was partly attributed to encouraging earnings reports from technology giants Microsoft and Amazon, which eased fears that heavy investments in data centers and semiconductor chips might not translate into sustainable profit growth. Both companies, along with Google, reported robust growth in their cloud computing divisions during the second quarter, which underpins demand for advanced chips. This development has helped shift investor sentiment toward a more positive outlook on semiconductor stocks.
Market analysts noted that the current volatility reflects the evolving nature of AI technology and its impacts on the tech sector overall. Vera Fehling, chief investment officer for Western Europe at DWS, commented that despite the fluctuations, the long-term growth prospects related to AI remain compelling, cautioning investors against underweight positions.
In South Korea, the rally was led by chipmakers SK Hynix and Samsung Electronics. SK Hynix shares soared 30 percent in the session, narrowing its weekly losses to just over 2 percent, while Samsung Electronics gained nearly 27 percent, finishing the week about 5 percent higher. Investor confidence in SK Hynix was bolstered by a significant insider purchase, with group chair Chey Tae-won acquiring approximately 3,600 shares worth $3.2 million, which market watchers viewed as a gesture of confidence in the company’s prospects.
Despite the positive momentum, some market participants urged caution. Albert Yong, managing partner at Petra Capital Management, a Seoul-based hedge fund, noted that while recent earnings helped allay fears over AI-related expenditures, it remains uncertain whether the rebound marks a sustained recovery or a temporary correction.
Institutional data from State Street indicated a gradual shift in sentiment, with more investors beginning to increase their exposure to semiconductor stocks after weeks of withdrawal. The sector’s performance in the first half of 2026 had been historically strong before the July sell-off raised questions about the durability of the AI-driven rally.
Overall, while immediate market jitters have eased, semiconductor stocks continue to face scrutiny as investors weigh the balance between rapid technological advances and the pace of commercialization and profitability.