AI industry not in a bubble, but stocks could see correction, SK chief says

By Hyunjoo Jin

SEOUL, Dec 5 (Reuters) – Artificial intelligence stocks could come under pressure after rising too fast and too much, but the industry is not in a bubble, the head of South Korean conglomerate that owns leading memory chipmaker SK Hynix said.

Concerns about lofty AI stock valuations have begun to weigh on broader financial markets, while there are questions about when huge AI investments will translate into actual profits.

“I don’t see a bubble in (the AI industry),” SK Group chairman Chey Tae-won said at a forum in Seoul when asked by the Bank of Korea governor about concerns over AI bubbles.

“But when you look at the stock markets, they rose too fast and too much, and I think it is natural that there could be some period of corrections,” he said, adding that AI stocks have been climbing beyond their fundamental value.

Chey said “overshooting” in stock valuations is not new for a growth industry, and the development of AI would lead to significant productivity gains.

Shares in SK Hynix, which supplies high-end memory chips to power Nvidia’s powerful AI chipsets, surged 214% over one year, propelled by robust demand for its products from AI data center builders which are investing trillions of dollars.

The South Korean company reported in October another record quarterly profit, driven by the AI boom, and said it has sold out all its chip production for next year, expecting an extended chip “super cycle.”

(Reporting by Hyunjoo Jin; Editing by Miyoung Kim and Jane Merriman)

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