AI Fundamentals vs. Macro Risks: Who Wins in September?

It has been confirmed that Apple is consistently lobbying the US government to continue adopting Chinese-made DRAM and YMTC NAND flash. The success or failure of this lobbying is expected to be a significant volatility factor for semiconductor stocks.

If the US government approves Apple's request, semiconductor market volatility could increase. Conversely, if the lobbying is denied, it could be interpreted as a positive signal, resolving one of the current market's negative factors.

This is because interest rate hikes make it difficult to secure the massive funding required for AI technology development.

The logic is that if the US continues its high-interest rate policy and the gap in AI industry growth narrows, it could actually give an advantage to China. Major US political forces, including Trump, also appear to be aware of the importance of this AI competitive situation.

Considering the current political situation, it is unlikely that the additional interest rate hike card, which could negatively impact the market, will be used.

It is observed that future election results, including the Republican National Convention, will significantly influence economic policy, and decisions detrimental to the market will not be made for political purposes.

The launch of OpenAI's 'Astra' model is evaluated to have significant ripple effects on the AI hardware market. Astra showed great progress in performance, including improved coding capabilities and a 51% reduction in hallucinations.

A key feature of this model is that its effectiveness increases with higher GPU usage. This, in turn, leads to increased GPU computing, creating a causal relationship that triggers demand for expanding high-performance memory (DRAM/NAND) storage.

Consequently, the Astra model is expected to be a crucial turning point, shifting market attention back to hardware from software.

The current market has already excessively priced in seven or eight of ten potential negative factors, such as geopolitical risks. Therefore, it is analyzed that a significant rebound can occur even if only two or three of these factors show signs of resolution, without needing all of them to be resolved.

In the short term, a market phase reflecting high uncertainty continues, but this ironically means that the market can react sensitively even to small positive changes.

The current geopolitical conflict in the Middle East is an uncomfortable situation for both the United States and China. Therefore, if a US-China summit takes place, it is possible that both sides could find common ground on this issue and lay the groundwork for resolving the US-Iran conflict.

In particular, with China moving in a direction that could help the US with its difficulties, there is also a possibility that cooperation deals in certain technological fields, such as CXMT, could be struck despite the de-coupling trend.

After August, a gradual easing of the concentration of supply and demand in the electric and electronics sectors, which led the stock market in the first half, has been observed. Investor interest is spreading to other sectors beyond the leading stocks.

In fact, the electric and electronics sectors, which showed strength in the first half, have been pushed to a lower priority, and foreign capital inflow into traditional non-mainstream sectors like construction, machinery, and chemicals has largely filled the void.

This demonstrates that aggressive infrastructure expansion investments are not merely expenditures but rapidly translate into revenue and profit through installation and operation.

Analysis suggests there is no single, major event-driven trigger likely to drive a year-end market rebound. Instead, the moment when the market shifts its focus from current uncertainties to positive factors is deemed crucial.

This shift in market perception could appear around the year-end or early next year, with the October earnings season also having the potential to be a turning point.

The Bloomberg Commodity Index is showing an upward trend, breaking its previous high. As this index comprehensively reflects the prices of various commodities, not just oil, it suggests that other commodity prices are also continuously rising.

Such a rise in commodity prices can be more favorable to the stock market in an inflationary environment than in deflationary one, and investors need to identify new investment opportunities in rising commodity prices.

Demand and benefits in the AI sector are clearly emerging. As Big Tech companies continue their strong AI investments, these funds are flowing into foundries and memory manufacturers.

As these companies also shift to increasing CAPEX, semiconductor chip manufacturers and materials, parts, and equipment (SoBuJang) companies directly benefit. Additionally, a ripple effect of benefits is expected across power-related facilities and the construction sector, essential for data center sites, with growth also anticipated for domestic construction and construction machinery companies.

Considering corporate fundamentals and stock performance, it is often more advantageous to seek investment opportunities in overseas markets like the US.

However, domestically, the construction and construction machinery sectors can be viewed positively. Rising commodity prices lead to increased mining development, which boosts demand for construction machinery, and transportation inefficiencies due to geopolitical risks (increased ton-mileage) can impact related industries.

The steel and chemical sectors in China are still facing unfavorable conditions. These industries have experienced a prolonged slump, and slow restructuring is currently underway.

Even industrial profit indicators show an overall sluggish trend, excluding advanced manufacturing. Therefore, it is difficult to say that the industry conditions have dramatically improved.

However, the valuation burden for these sectors is low. For related domestic companies, a cautious approach is necessary, considering cost burdens and the potential for intensified competition with Chinese companies.