The global AI stock market has taken a hit, exacerbated by the recent unveiling of China's Moonshot AI's ultra-low-cost open model, Kimi K3. This week, the upcoming earnings reports from major U.S. tech companies are expected to determine the future of the AI rally.
According to financial industry sources, the release of Kimi K3 on July 17 (local time) was a direct catalyst for the sharp decline in global AI stocks. The Philadelphia Semiconductor Index fell 1.63% on that day, marking a 20.2% drop from its peak on June 22. In the New York market, semiconductor stocks like Nvidia (-2.2%), Intel (-2.0%), and AMD (-1.0%) saw declines, along with major tech firms such as Meta (-2.7%) and Alphabet (-3.2%).
The domestic stock market was not spared from the fallout. The KOSPI closed on July 20 at 6,516.27, down 304.33 points (4.46%) from the previous trading day. However, on July 21, it rebounded by over 3%, as domestic semiconductor stocks had largely priced in concerns over a slowdown in AI investment, and bargain-hunting activity helped limit the losses, according to market analysts.
The first major test for the market will come after the close on July 22, when Alphabet is set to release its second-quarter earnings. As the first among hyperscalers to report, Wall Street's consensus anticipates revenue of $116.84 billion (approximately 172 trillion won), a 21.2% increase from the same period last year, with earnings per share (EPS) projected at $2.89.
Alphabet's cloud division saw a significant revenue increase of 63% year-over-year in the first quarter, reaching $20 billion, with a backlog of $462 billion, nearly double from the previous quarter. Observers will be watching to see if this growth trend continues.
On the same day, Tesla will also report its earnings, with consensus estimates of $26.4 billion in revenue and an EPS of $0.54. Tesla has already announced a surprise delivery figure of 480,126 units for the second quarter, exceeding market expectations by over 70,000 units, but the focus will be on its ability to maintain margins. The options market reflects an expected volatility of 7.6%.
Intel will follow on July 23, with varying estimates from different agencies suggesting an EPS in the range of $0.10 to $0.20 and revenue around $14.4 billion. A turnaround from a loss of $0.10 per share in the same quarter last year is anticipated.
The options market indicates a potential stock price fluctuation of about 15% following Intel's earnings report, significantly higher than the average fluctuation of 0.41% over the past four quarters. This suggests that the market views this earnings report as a critical event for assessing the direction of Intel's foundry business.
The key issue is whether the capital investment trends among big tech companies, led by Alphabet, will remain stable. With the emergence of low-cost open models from China, concerns about profitability in relation to AI investments have intensified. If hyperscalers signal a reduction in capital investment guidance, it could have repercussions for domestic semiconductor supply chains, including HBM and foundry sectors.
Conversely, if capital investment trends are maintained or increased, some argue that this adjustment may only be a short-term supply event.
* This article has been translated by AI.
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