AI Rally Propels SK Hynix, Samsung Shares to Record Gains

Shares of South Korea's leading semiconductor manufacturers, SK Hynix (KR:000660) and Samsung Electronics (KR:005930), experienced record gains on Friday, July 31, as the global artificial intelligence (AI) rally roared back to life. This surge followed a robust rebound in U.S. technology stocks, reigniting optimism surrounding AI infrastructure spending after weeks of market uncertainty.

On Friday, SK Hynix shares soared between 25% and 30%, while Samsung Electronics shares climbed between 20% and 28%. These substantial increases marked one of the largest single-day rallies on record for both companies. The catalyst for this impressive performance was the stronger-than-expected second-quarter earnings reports from U.S. tech giants Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT). Amazon's cloud computing business (AWS) and Microsoft's Azure growth figures surpassed expectations, alleviating concerns about a potential slowdown in demand for AI infrastructure and restoring confidence in the sector.

This remarkable rally had a significant impact on South Korea's benchmark KOSPI Composite Index (KR:180721), which closed with a gain of between 17% and 18%, marking its largest one-day percentage rise in history. The surge came after a period of sharp sell-offs earlier in the week, driven by doubts over AI valuations and increased competition from Chinese memory chipmakers. Despite Friday's record gains, the KOSPI still ended July down by approximately 22%, its biggest monthly decline since October 2008. This volatility underscores the pivotal role South Korean markets play as a barometer for the global AI trade.

Beyond corporate earnings, the broader context of this recovery includes supportive government initiatives. The South Korean government announced plans to inject nearly $14 billion into its sovereign wealth fund for AI investments and data centers, signaling strong national commitment to the sector. Furthermore, SK Group Chairman Chey Tae-won's personal purchase of SK Hynix shares provided a significant vote of confidence to investors. These developments highlight the transformative impact of AI on the global economy and the critical role of the chip industry in driving this transformation.

Analysts suggest that Friday's rally is not merely a relief bounce but is also supported by improving fundamentals. Investor confidence has been renewed that AI-driven demand for advanced chips and cloud infrastructure remains robust. However, some market observers remain cautious, reminding that even in bear markets, sharp and significant rallies can occur. Memory chipmakers anticipate that the strong demand for AI will lead to chip shortages persisting through 2028, with SK Hynix's chief extending that timeline beyond 2030. The ability of these companies to maintain pricing power and secure long-term supply agreements to sustain profitability will be closely watched in the coming period.