KOSPI Falls Far Harder Than Nikkei as AI Earnings Scare Hits Chipmakers

South Korea’s KOSPI fell 4.77% from Thursday’s close to 5,654.61 by 10:40 a.m. Seoul time on Friday. The drop followed a 12.64% slide in Alphabet shares after the Google parent’s capital spending more than doubled.

Japan’s Nikkei 225 lost 2.81% over the same stretch, so KOSPI fell about 1.7 times as hard. Samsung Electronics and SK Hynix shares took much of the hit, days after both chipmakers reported record profits.

Alphabet’s AI Bill Reaches Seoul’s Chipmakers

Spending was only part of Alphabet’s problem. Its third-quarter revenue rose 25% year over year to $127.6 billion, just below the $127.93 billion analysts expected.

Capital spending reached $51.4 billion, up 114% from a year earlier. That pushed free cash flow to minus $9.1 billion. Alphabet also expects capital spending to increase significantly in 2027.

Investors responded with the stock’s worst post-earnings drop in 22 years. That reaction carried straight into Seoul’s chip stocks on Friday.

Samsung stock was down 6.25% at press time, while SK Hynix dropped 8.91%. SK Hynix had posted record quarterly sales of 104.6 trillion won earlier this week.

Bigger data center budgets usually mean more memory chip orders for both companies. Investors focused instead on whether Alphabet can fund that spending while its cash flow runs negative.

The selling also tripped a sell-side sidecar. The Korea Exchange halted program selling at 10:04 a.m. The five-minute pause was the first sell-side halt in 11 trading days. It came three days after a buy-side pause.

Tokyo and Taipei also sold off on Friday, though by smaller margins.

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2 Chipmakers Set Seoul Apart From Its Neighbors

In Japan, the Nikkei had risen 1.1% on Thursday after Advantest raised its full-year forecast. Friday’s 2.81% loss erased that gain and more.

Taiwan’s TAIEX dropped 2.80% from its previous close to 45,069.51 by 9:53 a.m. local time. China’s CSI 300 slipped 0.83%.

Korea’s steeper fall comes down to how much of its index two companies represent. Samsung’s common and preferred shares and SK Hynix made up 50% of KOSPI market value. That was their average weight from October 19 to 23, Korea Exchange data shows.

Based on those weights, the two stocks’ declines account for about 3.7 points of the KOSPI’s 4.77% loss. 

Where the index heads next depends largely on whether chip earnings hold up. 2 global banks cut their KOSPI targets this week, though both still see room for gains from Friday’s level.

Goldman Sachs lowered its 12-month target to 9,000 from 12,000. The bank said chip valuations already imply a 65% fall in 2027 sector earnings, a view it called excessively pessimistic.

UBS trimmed its target to 7,500 from 8,000 on Thursday. Even that lower target sits about 33% above where the KOSPI traded at 10:40 a.m. on Friday. 

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