As debate continues over whether the artificial intelligence (AI) boom has peaked in the semiconductor supercycle, individual investors' strategies are clearly diverging. Some viewed the recent pullback as a buying opportunity and increased their semiconductor exposure, while others took profits or raised their cash holdings to brace for volatility. Brokerages said it is too early to conclude the AI cycle has ended, but they see future investment plans by U.S. big tech companies as the key variable that will set the direction of stock prices.
According to the Korea Exchange (KRX) on the 18th, the KOSPI reclaimed the 7,200 level on the 15th after three trading days. But the mood flipped in a day. On the 16th, the KOSPI plunged more than 6%, and Samsung Electronics and SK hynix each fell more than 8% and 11%. In New York at the time, Micron, Intel and AMD all dropped in unison, and SK hynix ADR also closed down 9%. Concerns remain unresolved over whether U.S. big tech companies will keep investing in AI.
◇ Individual investors cut semiconductor exposure… "Diversification first"
As uncertainty over an AI investment peak grows, individual investors are responding in their own ways.
A job seeker, a person surnamed Kim, 27, chose a KOSPI index exchange-traded fund (ETF) instead of focusing on semiconductors. Kim invested in U.S. stocks until early this year, then bought a domestic index ETF when the KOSPI was at the 5,700 level, and took profits after the KOSPI topped 9,000. As the pullback continued, Kim bought index ETFs again.
Kim is investing mainly in index ETFs rather than specific stocks such as Samsung Electronics and SK hynix or semiconductor ETFs, considering concerns about a semiconductor peak. However, Kim said, "Even when investing in the index, the semiconductor weighting is so high that it was hard to feel as much diversification as expected," adding, "If I judge there is room to rise, I buy more, and when profits reach a certain level, I take profits."
By contrast, a college student, a person surnamed Han, 22, reduced semiconductor exposure and turned to power and energy-related sectors. The experience of domestic semiconductor ETFs suffering the steepest losses in March, when the market wobbled amid U.S.-Iran military clashes, had an impact.
Han said, "With even single-stock leveraged ETFs launching recently, I judged the overheating has intensified, so I am diversifying into other industries."
◇ Still, AI marches on… Investors respond with additional buys and cash buffers
On the other hand, many investors continued to believe in the AI semiconductor supercycle.
An office worker, a person surnamed Lee, 26, has placed most investment assets in ETFs focused on Samsung Electronics and SK hynix. Lee said, "I know there are concerns about AI overheating, but I think semiconductors ultimately have no choice but to rise," adding, "Given solid earnings and fundamentals, I see the recent pullback as a temporary process and am buying more every month."
Some investors opted to secure cash. An office worker, a person surnamed Choi, 33, increased cash holdings by selling some semiconductor stocks when the KOSPI neared the 8,800 level last month.
Choi said, "As worries about an AI investment peak and talk of semiconductor concentration kept repeating, I judged it better to secure room to maneuver than to get greedy," adding, "I plan to buy again when the price burden eases."
Some investors, after missing the chance to sell at the top, moved to buy more. An office worker, a person surnamed Seo, 32, bought SK hynix in the 1 million won range, watched it rise to 2.9 million won without selling, and recently increased exposure again in the 2.2 million won range.
Seo said, "The semiconductor cycle is good, but I think money could move to other industries at some point," adding, "From now on, rather than only looking at profit, I felt I should also set a stop-loss threshold."
◇ "AI is not over… Keep the leaders, but respond flexibly"
Brokerages advise that the split in investor responses calls for distinguishing between an "end of the AI cycle" and a "slowing in stock price momentum."
Lee Jeong-bin, an analyst at Shinhan Investment & Securities, said, "In judging investments in AI leaders, the key variable is not current earnings but changes in future growth rates," explaining, "Even if earnings are solid, once guidance and growth expectations bend, stock price momentum can slow."
Lee added, "It is early to discuss the end of the AI memory cycle, but rather than a repeat of the steep earnings improvement of the past, the market is more likely to enter a phase where growth rates gradually normalize," and said, "Instead of sharply cutting exposure to leaders, a tactical approach is reasonable that maintains core AI positions while pairing them with sectors with high earnings visibility, such as autos, banks and cosmetics."
The market sees second-quarter earnings from U.S. big tech companies such as Microsoft (MS), Meta, Alphabet and Amazon, starting late this month, as a watershed to gauge whether AI investment has peaked. If hyperscalers' capital expenditure (CAPEX) plans hold, the recent pullback can be read as temporary volatility, but if signs of reduced investment are confirmed, volatility in semiconductor stocks could flare up again.