K-Semiconductors Rally on Nvidia's Earnings Surprise, KOSPI Charges Toward 7,000

The KOSPI index rose more than 2% intraday, extending its gains and passing the 6,950 level, while the KOSDAQ index turned positive intraday, climbing nearly 1% to 835 points. Foreign investors were net buyers of roughly 220 billion won in KOSPI spot shares and about 18 billion won in KOSDAQ, while also buying nearly 1 trillion won in the futures market, extending their buying bias. The won-dollar exchange rate fluctuated ahead of the rate decision before settling around 1,382 won.

The host noted that shrinking volatility is a positive market signal. As share prices rise, volatility gauges have fallen more than 3%, a pattern that has continued since early August. A similar pattern has appeared on Wall Street, suggesting the market is consolidating at a bottom while remaining outwardly calm.

Upcoming events include U.S. initial jobless claims figures and the opening of the Jackson Hole meeting later that night, followed by earnings from AI hardware companies such as Marvell Technology early the next morning. Chair Powell's keynote speech at Jackson Hole is scheduled for 11 p.m. Korea time on Friday night, with the Bank of Japan and the U.S. Federal Open Market Committee meetings also scheduled for the second and third weeks of September, drawing intense attention in succession.

A market that rises gradually by 2-3% daily was described as safer than one that swings 6-7% in either direction at once, since it faces less selling pressure. In terms of cumulative returns, gradual gains can actually outperform sharp rallies, and the advice was to stay invested for the long term rather than chase short-term surges.

Nvidia's second-quarter revenue came in at $96.2 billion, up 106% year-over-year and above market expectations. Adjusted earnings per share (EPS) topped $2, up more than 120% year-over-year, also beating estimates. Data center revenue reached $89 billion, up 117% year-over-year and above forecasts, while the adjusted gross margin—an area of concern—came in exactly at the market's expected 75%.

For next-quarter guidance, the company projected revenue of $108 billion, above the $104.2 billion estimate, with expected gross margin of 74%, staying in the 70s. On the earnings call, management noted that the Vera Rubin product is entering expanded mass production and that some partners have begun bringing systems online, while sharp growth in AI cloud and enterprise segments confirmed that the data center segment continues to drive overall results. Shares rose as much as 6% in after-hours trading immediately following the announcement.

The most notable point was guidance that next-quarter gross margin would decline to 71-72%. This was seen as the company itself confirming that rising memory prices are eating into its margins, making it the most credible evidence yet on semiconductor demand and pricing. The company said it is experiencing extreme memory pricing, and while it set fiscal 2028 revenue growth guidance at 70% for the first time, it noted that this figure was lowered to account for rising memory prices.

It was also disclosed that Amazon has placed an additional order for 2 million GPUs to be deployed by 2029. This was read both as a deliberate message meant to spur demand migration toward the new Vera Rubin product, and as a signal that major customers like Amazon have already moved to place advance orders.

Risk factors cited included slowing cash generation, the structure of credit guarantees and circular financing arrangements with customers, and the reasoning behind pinpointing next quarter as the margin trough. However, counterarguments were also raised: cash generation remains firmly positive, the credit guarantees are structured to generate additional future revenue on top of revenue already recognized, and the margin trough reflects the recently announced 15% price increase being reflected in the following quarter.

Following the earnings release, in a ranking of global corporate net income converted to Korean won, Samsung Electronics took first place with 89.5 trillion won, Nvidia came in second with 87.3 trillion won, and SK hynix ranked third, exceeding 60 trillion won—placing two Korean companies among the top three.

In the U.S., SK hynix broke ground on a packaging plant that day, and Samsung Electronics is also preparing to begin foundry operations, while the president has been meeting with the heads of major IT companies in succession to discuss mega-project matters, with a private meeting with Chairman Chung Eui-sun reportedly also being arranged.

Amid this, Mirae Asset Chairman Park Hyeon-joo said semiconductor production bases should remain in Korea rather than the U.S. His view is that even if oversupply occurs, a chicken game must be accepted; while investment in defense or energy in the U.S. is feasible, big tech including Nvidia cannot operate without semiconductors and HBM, so there is no need to be intimidated by U.S. tariff pressure.

Chairman Park stressed that even when investing in the U.S., a strategic, sector-by-sector approach is needed, and assessed that increased tax revenue from the semiconductor boom presents an opportunity to reshape Korea's economic structure. He noted that even 100 trillion won in tax revenue sustained for just five years would bring in 500 trillion won, and that it is important for the stock rally to spread beyond Samsung Electronics and SK hynix to equipment makers, front-end and back-end process firms, fabless companies, and clusters more broadly.

Nvidia's earnings and guidance were interpreted as confirmation, from an actual end-user's perspective, that memory chip prices continue to rise. Both the explanation for next quarter's gross margin decline and the reasoning behind the lowered fiscal 2028 revenue growth forecast pointed to rising memory prices as the underlying cause.

The new Vera Rubin product is designed to use greater amounts of HBM, which was read as opening an opportunity for Samsung Electronics, following SK hynix, to expand market share. It was also noted that the pace of order growth from hyperscalers is reaching a level that SK hynix's production capacity alone may struggle to meet.

Regarding the view that 'next quarter marks the peak in chip prices,' a counterargument was raised: Nvidia recently notified customers of a 15% price increase on items including servers, which will be reflected in the following quarter's margins—making it premature to extend this into a broader peak call for the semiconductor industry itself.

It was emphasized that data center revenue grew sharply not only from hyperscalers but also from so-called neo-cloud providers that deal exclusively in GPUs. U.S.-listed names such as Nebius and CoreWeave rose 3-5% in after-hours trading, underscoring the broad-based spread of the AI infrastructure buildout.

HD Hyundai Electric rose more than 8% and Hyosung Heavy Industries also rose more than 8%, with its share price breaking past the 3 million won mark, while in the battery sector, Samsung SDI rose as much as 10% at one point, as power and energy-related stocks rallied broadly. This followed President Trump's declaration of a national emergency for the U.S. power grid, under which the Department of Energy will restrict transactions involving foreign-made power equipment rated 69kV or above that pose national security, cyber, or supply chain risks.

It was noted that with Korean companies expanding local production in the U.S., this measure worked favorably for power equipment stocks. The energy storage system (ESS) market is also expanding in tandem with power equipment, moving in step with Samsung SDI's recent decision to concentrate proceeds from its sale of Samsung Display shares into its ESS business.

At this week's 'Hot Chips 2026' event in the U.S., various new products were unveiled, but the discussion converged on a common conclusion of expanding memory demand, which reportedly also drove relatively strong performance in power equipment stocks on U.S. markets.

The U.S. released its July Personal Consumption Expenditures (PCE) price data. The headline PCE came in at 3.7% year-over-year, above the 3.6% forecast, while core PCE, excluding energy and food, matched expectations at 3.3% year-over-year and 0.2% month-over-month. Market attention concentrated on the report given that the Fed weighs it more heavily than CPI or PPI. A change in the calculation methodology set for September was also mentioned as a factor that could lead to a downward revision of this July figure later.

By category, energy and goods prices were relatively stable, while services prices—including financial services and insurance—continued to rise, pushing the overall index higher. This was interpreted as linked to increased consumer spending, and since it reflects income-driven, more fluid pricing rather than sticky items like mortgages or oil, it was assessed as too early to call it a sustained upward trend. Consequently, questions were raised over whether rate hikes can even bring down services prices.

Following the release, the probability of a September rate cut briefly fell to as low as 44%, rising 8 percentage points, before partially reversing after Nvidia's earnings were announced. Overall, there is recognition that price pressures have not fully dissipated, but the prevailing view was that, barring a sharp spike in oil prices or other key variables, this report does not warrant an expanded reading as an immediate tightening pressure.

It was also noted that with U.S. growth running around 2% while inflation runs above 3%, real purchasing power continues to erode. This was cited as the backdrop for why the Fed is likely to keep policy oriented toward lowering inflation rather than boosting growth.

The Bank of Korea's Monetary Policy Board raised the policy rate from 2.75% to 3%. Five of the six board members voted in favor of the hike, with one dissent, and this marked the first-ever instance of a 'back-to-back' hike immediately following the start of a hiking cycle, prompting assessments that the pace of tightening has accelerated. The consecutive hike itself was also flagged as only the fourth such instance in the bank's history, an unusual occurrence.

In the accompanying dot plot, a majority of board members pointed to 3.25%, signaling the possibility of one more hike. That is 25 basis points above the median of 3% shown in the May dot plot. Governor Shin Hyun-song said preemptive action was needed for macroeconomic stability, describing it as a policy of 'stopping a leak with a trowel rather than letting it drip,' and added that it could also help ease the rise in Seoul metropolitan area home prices.

In the revised economic outlook, this year's growth forecast was raised from 2.6% in May to 3.3%, and next year's forecast was raised by 0.8 percentage points to 2.9%. The semiconductor cycle, along with investment, private consumption, and domestic demand, were cited as factors expected to broadly drive growth.

The market interpreted the hike as a belated policy normalization catching up to market rates that had already outpaced the policy rate. By pairing the hike with dot-plot guidance suggesting 'one more moderate hike,' the central bank reduced uncertainty, and as a result, three-year and ten-year government bond yields actually fell, suggesting the market took the move as less hawkish than expected. The Korea-U.S. interest rate gap also narrowed to within 0.75 percentage points as of that day.

The host noted that historically, it has been rare for Korea's policy rate to sit below that of the U.S., suggesting this hike should be read as a normalization process rather than an unusual tightening move. That said, separate policy consideration was flagged as necessary for small business owners and lower-income groups carrying heavy debt burdens.

At the same event, Chairman Park Hyeon-joo also commented on real estate. He said the era of making money from real estate must end, and that home price increases must stop for younger generations to have hope for the future. He assessed the recently revised real estate tax system as fairly strong, and forecast that the property tax burden could actually lead to more properties coming onto the market. He said cases could emerge where owners must pay 100 million won in property tax, adding that he personally believes real estate has already peaked.

He cited the example that a 100 million won investment in Samsung Electronics at the time of its founding would now be worth 50 billion won, arguing that as semiconductor-centered industrial competitiveness has strengthened, capital should shift from real estate to more productive sectors. He said companies that boldly invest based on accumulated capital ultimately succeed, and that if this trend continues, it could also help resolve housing problems for people in their 20s and 30s.

The chairman of the National Pension Service appeared on Noon Salon that day to address controversy over whether the fund's rebalancing sales in late June and early July worsened market volatility. He noted that the fund had previously been criticized for not rebalancing and instead riding along as the KOSPI rose from 2,300 to 9,000, so this time, as the index fell from 9,000 back to the 6,000 level, it deliberately held back on selling and responded cautiously. He stressed that the fund's performance should not be judged based solely on June and August, but at minimum after the 2026 year-end results, and ideally only after at least three years have passed.

The chairman pointed out that even though the National Pension Service holds only 6-7% of KOSPI market capitalization, the public perception that it accounts for 70-80% is itself a risk. He said that whether the fund sells or buys, its actions get overinterpreted, making calm, stable management difficult. He reiterated that the fund is a long-term investor pursuing long-term returns and makes decisions based on principle, excluding any political considerations.

He recalled that he took office to stabilize the organization after the 2017 Samsung merger and state affairs scandal, during which both the chairman and the head of the fund management division were detained, leaving a 10-month leadership vacuum, and that he made the independence of fund management the top priority at that time. He reaffirmed his conviction that the fund belongs neither to the president nor to conglomerate chairmen but is the public's retirement fund, into which no political power should be allowed to intervene, and assessed that independence from the government, the ruling power, the National Assembly, and market interests alike is now firmly established.

The host stressed that a market rising steadily by 2-3% daily is safer than one surging 6-7% in a single day, since it faces less selling pressure. He pointed out that, calculated cumulatively, gradual gains can outperform sharp rallies, and that investors should be wary of the very mindset that craves dramatic surges.

He said that even with a report as complex and extensive as Nvidia's earnings, share price action ultimately reflects the market's final judgment, and interpreted the roughly 5% gain following this release as a sign of market relief. He assessed that the relatively limited rally in response to news that would once have driven a much bigger jump is, if anything, evidence of a stable market with reduced volatility.