Big Tech Leads Market Surge Amid Apple's 4% Gain Amidst Economic Concerns

Big Tech companies are driving the market's rebound, with Apple's shares surging 4.4% following President Donald Trump's announcement of a $100 billion investment commitment from the company. The S&P 500 is around 6,300, while Advanced Micro Devices Inc.'s shares fell 8.4% despite beating earnings expectations, citing uncertainty over access to the Chinese market. Overall, S&P 500 earnings are exceeding expectations, up 9.1% for Q2, the highest rate since 2021.

Big tech companies are driving the market's rebound, with Apple's shares surging 4.4% following President Donald Trump's announcement of a $100 billion investment commitment from the company. The S&P 500 is around 6,300, while Advanced Micro Devices Inc.'s shares fell 8.4% despite beating earnings expectations, citing uncertainty over access to the Chinese market. Overall, S&P 500 earnings are exceeding expectations, up 9.1% for Q2, the highest rate since 2021 [3].

Global tech giants like Apple, Microsoft, and Meta have reaffirmed their policy to expand investment in artificial intelligence (AI) infrastructure. These companies, which have recently reported strong earnings, are poised to boost demand for high-tech semiconductors, particularly next-generation memory such as HBM3E and HBM4 [1].

Apple's CEO Tim Cook announced that the company will "meaningfully expand our investment in AI," which will be a major driver of facility and infrastructure investment this year. Microsoft and Meta have also emphasized their commitment to AI investment, with Microsoft planning to expand its capital expenditure to up to $30 billion and Meta raising its facility and infrastructure investment guidance to up to $72 billion [1].

The expansion of AI investment by these big tech companies is expected to significantly boost the demand for high-bandwidth memory (HBM3E and HBM4) and DDR5 for AI servers. SK Hynix is increasing HBM3E supply, centering on Nvidia, and Samsung Electronics is preparing to expand its HBM3E volume and has produced HBM4 samples and supplied them to global big tech companies [1].

The foundry sector is also expected to benefit from the large-scale expansion of AI data centers by Microsoft and Meta, which will drive demand for high-tech semiconductors such as AI accelerators, GPUs, and ASICs dedicated to AI. Samsung Electronics has secured orders for AI-only chips such as Tesla AI chips and Google TPU, and if demand from additional AI investments is added, foundry utilization and profitability are likely to improve [1].

However, the expansion of Apple's modem chip's own design could pose a challenge to Samsung Electronics. Since Apple is focusing its foundry production on TSMC, the more its chip design increases, the less likely Samsung Foundry is to win Apple chip orders [1].

The market is also wary of the possibility of increasing volatility in the semiconductor economy due to AI investment in the long term. Semiconductor companies need to make large-scale investments in the early stages to mass-produce semiconductors for AI servers. If big tech companies drastically reduce their investments due to external variables, they can be greatly affected [1].

A semiconductor industry official advised that domestic companies need strategies to strengthen mid- to long-term competitiveness by securing technology and diversifying customers. The high possibility of continued expansion of AI investment underscores the need for strategic planning and innovation in the semiconductor industry [1].

References:
[1] https://www.mk.co.kr/en/business/11383392
[2] https://www.marketscreener.com/news/apple-to-invest-another-100-billion-in-us-ce7c5eded989f726
[3] https://finance.yahoo.com/news/live/earnings-live-amd-rivian-lucid-snap-and-super-micro-computer-stocks-fall-after-quarterly-results-202947161.html