bubble

South Korean stocks closed sharply lower Friday, as renewed concerns over an artificial intelligence (AI) bubble weighed heavily on big-cap tech shares. The local currency fell to the lowest level in seven months against the U.S. dollar on massive foreign stock selling.

The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 151.59 points, or 3.79 percent, to close at 3,853.26.

Trade volume was moderate at 307.95 million shares worth 14.02 trillion won (US$9.5 billion), with decliners outnumbering gainers 718 to 177.

Foreigners sold a net 2.83 trillion won worth of shares, while retail and institutional investors bought a net 2.29 trillion won and 495.46 billion won worth of shares, respectively.

According to the Korea Exchange, offshore investors’ net selling reached its largest level since Feb. 26, 2021, when they offloaded 2.83 trillion won worth of shares.

The index opened lower, tracking overnight losses on Wall Street, and further extended its decline as investors were wary of the valuation of AI-related shares and their aggressive investment plans.

Also affecting the sentiment was the Federal Reserve‘s monetary policy, as expectations for further rate cuts continued to wane.

“The market surrendered its gains from yesterday’s Nvidia earnings surprise. Following recent sharp gains, volatility appears to have persisted,” Han Ji-young, a researcher at Kiwoom Securities, said.

“But there remains ample potential for sentiment to reverse depending on upcoming key economic data and additional AI-related developments,” the analyst added.

Tech shares dipped following a rally in the previous session.

Market bellwether Samsung Electronics fell 5.77 percent to 94,800 won, and chip giant SK hynix plunged 8.76 percent to 521,000 won.

Major battery maker LG Energy Solution lost 3.51 percent to 425,500 won, and LG Chem dipped 5.53 percent to 367,000 won.

Nuclear power plant builder Doosan Enerbility sank 5.92 percent to 73,100 won, and defense giant Hanwha Aerospace shed 5.13 percent to 869,000 won.

Leading shipbuilder HD Hyundai Heavy skidded 4.8 percent to 555,000 won, and its rival Hanwha Ocean lost 4.16 percent to 119,800 won. No. 1 steelmaker POSCO declined 3.42 percent to 310,500 won.

Carmakers finished mixed. Top automaker Hyundai Motor retreated 0.95 percent to 259,500 won, while its sister affiliate Kia rose 0.53 percent to 114,000 won.

Leading financial group KB Financial decreased 0.58 percent to 120,500 won, while internet portal operator Naver surged 2.14 percent to 262,500 won.

The local currency was quoted at 1,475.6 won against the greenback at 3:30 p.m., down 7.7 won from the previous session.

It marked the weakest level since April 9, when it finished at 1,484.1 won. The April 9 figure was the lowest since March 12, 2009, when the won closed at 1,496.5 amid the global financial crisis.

Bond prices, which move inversely to yields, ended higher. The yield on three-year Treasurys fell 3.6 basis points to 2.872 percent, and the return on the benchmark five-year government bonds lost 3.9 basis points to 3.076 percent.

Copyright (c) Yonhap News Agency prohibits its content from being redistributed or reprinted without consent, and forbids the content from being learned and used by artificial intelligence systems.

Published on
20/11/2025 – 7:32 GMT+1

Shares in Nvidia rose more than 5% in after-hours trading after the chipmaker beat analysts’ expectations in its quarterly earnings report, released Wednesday.

In the three months to the end of October, Nvidia said its revenue jumped 62% to $57 billion (€49.49bn). The company reported $51.2bn (€44.43bn) in revenue from data-centre sales, beating expectations of $49bn (€42.52bn).

The firm also placed a forecast for the current quarter at $65bn (€56.41bn), surpassing Wall Street expectations of $61bn (€52.94bn).

“There’s been a lot of talk about an AI bubble,” said CEO Jensen Huang during an earnings call.

“From our vantage point, we see something very different. As a reminder, Nvidia is unlike any other accelerator. We excel at every phase of AI from pre-training to post-training to inference.”

Nvidia is now the largest stock on Wall Street, having momentarily surpassed $5 trillion in value. That means it has an outsized influence on the S&P 500 and can make or break the market’s daily performance.

The firm has also become a bellwether for the broader frenzy around AI, notably because other companies rely on Nvidia chips for this technology.

AI stocks have taken a hit in recent weeks as investors questioned whether certain tech companies had been overvalued, driving fears of a market crash.

Before Wednesday’s earnings report, Nvidia’s chips had dropped 11% from their peak in early November.

CEO Huang sought to ease concerns of a bubble on Wednesday, claiming: “AI is going everywhere, doing everything, all at once.” He noted that Nvidia was focused on major transition areas, namely generative, agentic, and physical AI.

Generative AI can create things, agentic can accomplish a specific goal with limited supervision, while physical AI relates to the physical world — for example through robots.

Analysts expect AI chip demand to remain strong.

Nvidia has forecast fourth-quarter revenue above Wall Street estimates and is betting on booming demand for its AI chips from cloud providers even as widespread concerns of an artificial intelligence bubble grow stronger.

The world’s most valuable company expects fourth-quarter sales of $65bn, plus or minus 2 percent, compared with analysts’ average estimate of $61.66bn, according to data compiled by LSEG.

The results from the AI chip leader mark a defining moment for Wall Street as global markets look to the chip designer to determine whether investing billions of dollars in AI infrastructure expansion has resulted in towering valuations that potentially outpace fundamentals.

“The AI ecosystem is scaling fast with more new foundation model makers, more AI start-ups across more industries and in more countries. AI is going everywhere, doing everything, all at once,” Nvidia CEO Jensen Huang said in a statement.

Before the results, doubts had pushed Nvidia shares down nearly 8 percent in November after a 1,200 percent surge in the past three years.

Sales in the data-centre segment, which accounts for a majority of Nvidia’s revenue, grew to $51.2bn in the quarter that ended on October 26. Analysts had expected sales of $48.62bn, according to LSEG data.

Warning signs

But some analysts noted that factors beyond Nvidia’s control could impede its growth.

“While GPU [graphics processing unit] demand continues to be massive, investors are increasingly focused on whether hyperscalers can actually put this capacity to use fast enough,” said Jacob Bourne, an analyst with eMarketer. “The question is whether physical bottlenecks in power, land and grid access will cap how quickly this demand translates into revenue growth through 2026 and beyond.”

Nvidia’s business also became increasingly concentrated in its fiscal third quarter with four customers accounting for 61 percent of sales. At the same time, it sharply ramped up how much money it spends renting back its own chips from its cloud customers, who otherwise cannot rent them out, with those contracts totalling $26bn – more than double their $12.6bn in the previous quarter.

Still, analysts and investors widely expected the underlying demand for AI chips, which has powered Nvidia results since ChatGPT’s launch in late 2022, to remain strong.

Nvidia CEO Jensen Huang said last month that the company has $500bn in bookings for its advanced chips through 2026.

Big Tech, among Nvidia’s largest customers, has doubled down on spending to expand AI data centres and snatch the most advanced, pricey chips as it commits to multibillion-dollar, multigigawatt build-outs.

Microsoft last month reported a record capital expenditure of nearly $35bn for its fiscal first quarter  with roughly half of it spent primarily on chips.

Nvidia expects an adjusted gross margin of 75 percent, plus or minus 50 basis points in the fourth quarter, compared with market expectation of 74.5 percent.

An estimated half a trillion dollars was wiped out from the financial markets this week, as some of the biggest tech companies, including Nvidia, Microsoft, and Palantir Technologies saw a temporary but sizeable drop in their share prices on Tuesday. It may have been just a short-lived correction, but experts warn of mounting signs of a financial market crash, which could cost several times this amount.

With dependence on tech and AI growing, critics argue that betting on these profits is a gamble, stressing that the future remains uncertain.

Singapore’s central bank joined a global chorus of warnings from the IMF, Fed Chair Jerome Powell, and Andrew Bailey about overvalued stocks.

The Monetary Authority of Singapore said on Wednesday that such a trend is fuelled by “optimism in AI’s ability to generate sufficient future returns”, which could trigger sharp corrections in the broader stock market.

Goldman Sachs and Morgan Stanley predict a 10–20% decline in equities over the next one to two years, their CEOs told the Global Financial Leaders’ Investment Summit in Hong Kong, CNBC reported.

Experts interviewed by Euronews Business also agree that a sizeable correction could be on the way.

In a worst-case scenario, a market crash could wipe out trillions of dollars from the financial markets.

According to Mathieu Savary, chief European strategist at BCA Research, Big Tech companies, including Nvidia and Alphabet, would cause a $4.4 trillion (€3.8tn) market wipeout if they were to lose just 20% of their stock value.

“If they go down 50%, you’re talking about an $11tr (€9.6tr) haircut,” he said.

AI rally: Bubble or boom?

The US stock market has defied expectations this year. The S&P 500 is up nearly 20% over the past 12 months, despite geopolitical tensions and global trade uncertainty driven by Washington’s tariff policies. Gains have been strongest in tech, buoyed by optimism over future AI profits.

While Big Tech continues to deliver, with multibillion-dollar AI investments and massive infrastructure buildouts now routine, concerns are growing over a slowing US economy, compounded by limited data during the government shutdown. Once fresh figures emerge, they could rattle investors.

AI enthusiasm is most evident in Nvidia’s extraordinary stock gains and soaring valuation. The company is central to the tech revolution as its graphics processing units (GPUs) are essential for AI computing.

Nvidia’s shares have surged over 3,000% since early 2020, recently making it the world’s most valuable public company. Between July and October alone, it gained $1tr (€870bn) in market capitalisation — roughly equal to Switzerland’s annual GDP. Its stock trades at around 45 times projected earnings for the current fiscal year.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Much of this growth is backed by real financial progress, and despite the massive nominal increase in value, relative valuations don’t look overstretched.”

Analysts debate whether the current market mirrors the dot-com bubble of 2000. Nathan notes that many tech companies that failed back then never reached profitability, unlike today’s giants, which generate strong revenues and profits, with robust demand for their products.

Ben Barringer, global head of technology research at Quilter Cheviot, added: “With governments investing heavily in AI infrastructure and rate cuts likely on the horizon, the sector has solid foundations. It is an expensive market, but not necessarily a screaming bubble. Momentum is hard to sustain, and not every company will thrive.”

BCA Research sees a bubble forming, though not set to burst immediately. Chief European strategist Mathieu Savary said such bubbles historically peak when firms begin relying on external financing for large projects.

Investments in assets for future growth, or capital expenditures, as a share of operating cash flow, have jumped from 35% to 70% for hyperscalers, according to Savary. Hyperscalers are tech firms such as Microsoft, Google, and Meta that run massive cloud computing networks.

“The share of operating earnings is likely to move above 100% before we hit the peak,” Savary added. This means that they may soon be investing more than they earn from operations.

Recent examples of Big Tech firms turning to external financing for such moves include Meta’s Hyperion project with Blue Owl Capital and Alphabet’s €3 billion bond issue for AI and cloud expansion.

While AI investment growth is hard to sustain, Quilter’s Barringer told Euronews: “If CapEx starts to moderate later this year, markets may start to get nervous.”

Other factors to watch include return on invested capital and rising yields and inflation pressures, which could signal a higher cost of capital and a bubble approaching its end.

“But we’re not there yet,” said Savary.

Further concerns and how to hedge against market turbulence

Even as tech companies ride the AI wave, inflated expectations for future profits may prove difficult to meet.

“The sceptics’ main problem may not be with AI’s potential itself, but with the valuations investors are paying for that potential and the speed at which they expect it to materialise,” said AJ Bell investment director Russ Mould.

A recent report by BCA reflects the mounting reasons to question the AI narrative, but the technology “remains a potent force”, said the group.

If investor optimism does slow, “a sharp correction in tech could still have ripple effects across broader markets, given the sector’s dominant weight in global indices,” Barringer said. He added that other regions and asset classes, such as bonds and commodities, would be less directly affected and could provide an important balance during a downturn.

According to Emma Wall, chief investment strategist at Hargreaves Lansdown, “investors should use this opportunity to crystallise impressive gains and diversify their portfolios to include a range of sectors, geographies and asset classes — adding resilience to portfolios. The gold price tipping up is screaming a warning again — a siren that this rally will not last.”