SK Securities Says AI Demand Intact, Calls KOSPI a Buy

SK Securities argues that current market anxiety regarding artificial intelligence investment is centered on financing conditions, not a decline in demand for AI computing. This view contrasts with historical bubble bursts, like the dot-com era or the 2008 financial crisis, which were characterized by an initial drop in effective demand before broader market collapses.

Indicators such as a 14% monthly rise in rental prices for Nvidia's B200 graphics processing unit (a specialized computer chip vital for AI computations) suggest sustained demand. Nvidia's CEO has also stated that demand is ample, and Amazon forecasts cloud capacity will remain constrained through next year. This suggests that funding challenges are intensifying competition for computing power, rather than reducing the need for it.

The analysis also points to improved valuations in the Korean stock market. The semiconductor sector's 12-month forward price-to-book ratio has returned to its average range from 2010-2024, prior to the AI investment boom, according to QuantiWise. Forecasts for return on equity, however, remain more than four times the historical average, implying strong underlying profitability.

This valuation appeal extends beyond chipmakers. Excluding Samsung Electronics and SK hynix, the KOSPI has also fallen to its historical average valuation. While short-term volatility related to AI investment durability may persist, the report concludes that the current correction should not be seen as a structural collapse as long as demand for AI technology remains strong.