Samsung, SK Hynix earnings set to determine Kospi's next move

Second-quarter earnings from Samsung Electronics and SK Hynix, as well as US Big Tech giants Microsoft, Meta, Amazon and Apple, are all due next week, alongside a Federal Reserve policy meeting. With Alphabet having reaffirmed its commitment to expanding AI capital expenditure, the investment plans of other hyperscalers and domestic chipmakers' second-half guidance are seen as the key factors determining whether the Kospi can push higher.

The Kospi closed down 406.27 points, or 5.72 percent, at 6,690.62 on Friday, according to Korea Exchange. For the week of July 20 to 24, the Kospi fell 1.91 percent while the Kosdaq dropped 5.51 percent.

Domestic markets were volatile this week, with semiconductor stocks bearing the brunt of selling pressure as Chinese AI companies — including Moonshot AI and Alibaba — released a string of low-cost, high-performance open-source models, stoking fears that US Big Tech could lose its edge in artificial intelligence. Ongoing US-Iran military clashes, which pushed up international oil prices and market interest rates, also weighed on investor sentiment.

Those concerns eased somewhat after Alphabet reported cloud revenue that beat expectations and raised its full-year capital expenditure forecast to between $195 billion and $205 billion — up from a prior range of $180 billion to $190 billion — while pledging a substantial increase in investment next year as well. Its cloud order backlog also grew from $460 billion to $514 billion. The company added that even with aggressive capacity expansion, supply has been unable to keep pace with demand, reinforcing the view that AI infrastructure demand remains robust.

With fears of a slowdown in AI investment having receded, market watchers are now focused on whether other hyperscalers will echo Alphabet's commitment to expanding AI capital expenditure when they report next week. Microsoft and Meta are scheduled to release second-quarter results on Wednesday, followed by Amazon and Apple on Thursday.

On the domestic front, SK Hynix reports on Wednesday and Samsung Electronics on Thursday. Analysts are paying close attention to what both companies say about long-term supply agreements and their outlook for memory chip demand and profitability. Of particular interest is whether SK Hynix will deliver results that beat market expectations and announce shareholder return measures. Strong earnings from other major companies — Doosan Enerbility on Monday, BNK Financial Group on Tuesday, Hanwha Solutions on Wednesday and Hanwha Aerospace on Friday — could also support an index rebound if they top market forecasts.

"The 2027 operating profit consensus for Kospi semiconductor stocks has turned back upward, now standing at 998.3 trillion won ($679 billion), and we expect earnings forecast upgrades to accelerate further as next week's results come in," said Lee Gyeong-min, an analyst at Daishin Securities.

The July FOMC meeting, scheduled for the early hours of Thursday, is another focal point. Markets widely expect the Fed to hold its benchmark interest rate steady, though escalating US-Iran tensions and fears of a Red Sea blockade could stoke inflationary pressure. Analysts note the situation could follow the same pattern seen during the US-Iran clashes of March and April, when President Donald Trump ultimately backed away from a hardline stance — a dynamic Wall Street has dubbed "TACO," short for "Trump Always Chickens Out." If the Fed refrains from sending additional tightening signals, analysts say stabilizing bond yields and exchange rates could draw foreign net buying back into the market and sustain a Kospi recovery.

NH Investment set its Kospi forecast range for next week at 6,700 to 7,600 points, citing easing AI capital expenditure concerns and upward earnings revisions as potential tailwinds, and an escalation of US-Iran military conflict as the main downside risk.

"If other hyperscalers' results confirm the same AI supply shortage and capital expenditure expansion trend that Alphabet signaled, the Kospi could rebuild upward momentum," said Lee Sang-jun, an analyst at NH Investment. "The upward pressure on oil prices and market interest rates from the US-Iran conflict is a risk to watch, but if oil prices rise further, the political burden on President Trump will also grow — making it likely he will ultimately soften his hardline stance."