AI Investment Continues Despite High Interest Rates; Focus on Semiconductors and Memory

With no special developments other than the two-month extension of tariff trade regulations from the US-China summit, macroeconomic trends in the US market were neutral during the holiday.

The US-China summit left only uncertainty, with no specific outcomes beyond a two-month extension of tariffs and trade restrictions.

Park Jong-yeon, Department Head at MP Partners, stated that bond yield volatility and US-China negotiation disputes left only uncertainty without a conclusion.

The strong performance of Samsung Electronics shares is due to the ex-dividend effect for quarterly dividends, and unlike pre-holiday concerns, no significant fluctuations are expected from this event.

Institutional rebalancing and dividend-related supply and demand are projected to significantly influence the market this week.

This differentiation is understood to be more influenced by supply and demand than by actual performance.

The US midterm elections have become a more significant market variable than discussions about a December rate hike.

While a December rate hike is being discussed, there's no need to react excessively to short-term indicators.

It is expected that the US midterm elections, scheduled before December, will act as a more important event for the market.

Meta and AMD reaching new highs indicates that market capital is shifting towards high-profit stocks within the AI ecosystem.

Market capital is moving towards more profitable areas within the AI ecosystem, and the new highs reached by Meta and AMD seem to reflect this technological expansiveness.

As market funds flow towards higher-yielding opportunities, the AI industry is expanding beyond GPUs.

Downside pressure on major stocks like Samsung Electronics and SK Hynix is limited, and there's no need to fear a sharp decline. The market is experiencing more frustration from a lack of upward momentum, leading to stagnation rather than a fall.

This week's key variables include month-end and semi-annual supply and demand, the Samsung Electronics dividend, and Micron's earnings announcement.

The expected return based on a 20x multiple for the S&P 500 is around 5%.

Currently, the US 10-year Treasury yield has also risen to about 5%, causing an inversion where the expected return and bond yield are roughly equal.

Asset price fluctuations are an unavoidable aspect influenced by liquidity flows.

There is a possibility of upward adjustment in global neutral interest rates and a prolonged period of high interest rates (New Normal).

It is projected that the surge in AI investment will end the era of savings glut and transition to a productivity-driven era, with AI offsetting borrowing costs.

Park Jong-yeon, Department Head, stated, "I believe that as the era of savings glut ends and we enter an era of surging AI investment, productivity will offset borrowing costs." However, there is a risk of polarization between countries and companies due to differences in financial strength.

Bill Ackman expressed concern about a unique historical context where high interest rates fail to curb demand and investment.

Even in a vicious cycle where high interest rates stimulate inflation, investment in AI and energy sectors is expected to continue.

Park Jong-yeon, Department Head, quoted Bill Ackman's perspective: "If demand for AI and energy continues to attract investment despite high interest rates, given the immense profits to be gained from winning the AI race."

A polarization phenomenon is observed, where the Dow Jones Industrial Average has declined but the Nasdaq has reached new highs.

Investment will concentrate on companies that can link profits even in a high-interest rate environment, and market differentiation is expected to deepen further.

Market differentiation is intensifying around companies and industries that can overcome high interest rates, and focusing investments on growth sectors remains effective.

Park Jong-yeon, Department Head, advised that while a short-term market rally is possible, it is not a time for long-term stock holding.

Individual investors should make decisions based on discernible indicators and supply/demand, managing risk through phased trading and portfolio management.

Although the environment has changed, an 'Everything Rally' phenomenon is still occurring, and not only will the index rise, but differentiation between sectors and stocks is expected to deepen.

The adoption rate of wearable devices (pins, glasses, rings, etc.) that will replace smartphones is expected to accelerate with the advancement of AI technology.

AI is evolving beyond simple infrastructure building to become an 'AI agent' integrated with various services like shopping, payments, and travel.

The introduction and servitization of AI agents will proceed gradually, and during this process, the growth of the memory market should be noted.

Micron 2026 is expected to unveil new memory processing technologies aimed at complementing GPU inefficiencies and reducing load.

As inference technology advances, efficiency improvements are being pursued where simple computations are handled directly by memory.

This indicates a shift in memory's status from a mere component to a protocol-based core element responsible for a portion of AI computing.

Next-generation memory technology is emerging that directly handles short context processing in memory to alleviate GPU computational overload.

This means that conventional memory is moving beyond its role as a simple component to being an entity responsible for computations that adhere to protocols.

Park Jong-yeon, Department Head, emphasized, "In the past, memory was just a component. But now, it needs to conform to protocols where it handles a portion of the tasks. This is no longer a component. That's how much its status has changed," explaining that market perception of the memory industry's changing status and structural growth is shifting.

In the KOSDAQ market, major biotech stocks like HLB showed strong performance, with trading volumes surging and hitting daily limits.

Other biotech companies such as LeqChem Bio and ABL Bio also saw simultaneous increases, and unlike KOSPI's solar and LG group stocks, KOSDAQ was mostly composed of biotech stocks, showing clear sector-specific differentiation.