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Next, we will begin Issue Money. Economic commentator Kwon Hyuk-joong is here with us. Hello. Yes, hello. Yes. Our first keyword is "Why it fell despite earning 100 trillion won." So, SK Hynix announced its quarterly results the day before yesterday, and Samsung Electronics did the same yesterday; while they broke records in terms of performance, yesterday's stock market sentiment dropped significantly.
What was different compared to the day before ? That is correct. As for the earnings, they were already expected by investors . I would say that selling pressure emerged due to disappointment regarding shareholder returns. First of all, Samsung Electronics 'profit. It reached an all-time high. Third-quarter operating profit came in at a staggering 107.4 trillion won, which marks the first time a company has exceeded 100 trillion won in a single quarter.
So, it is truly a remarkable achievement . However, investors were quite disappointed by the lukewarm announcement regarding shareholder returns. So, there are many rumors in the market. Why are they so quiet about shareholder returns? Some mention the Financial Industry Separation Act. Others speculate about internal issues, but nothing has been officially confirmed.
Another factor is the comparison with SK Hynix. Because the day before, they announced a massive 100 trillion won plan, whereas Samsung Electronics did not. As a result, I believe disappointment led to selling pressure, and Bloomberg used this expression. They cited a Nomura Securities analyst, describing the KOSPI as the key barometer for investment in the AI industry.
They explained that because expectations are so high, even a slight shortfall is bound to trigger selling pressure in the market. Yes. Overseas big tech companies are also continuing to announce their AI-related earnings, and concerns regarding tech stocks keep being raised. It seems the decline was quite pronounced in the New York stock market early this morning as well.
Yes, that's right. It comes down to whether they are making money or not. Alphabet fell by 12%in the last session . But as you already know, Alphabet. It had already dropped sharply in after-hours trading following the earnings announcement. Despite the fact that cloud revenue grew by 103%in one year.
The stock essentially started to fall simply because the company's operating profit missed expectations, and what stands out in particular is that free cash flow recorded a deficit of a whopping 9 billion dollars. In short, they recorded losses for two consecutive quarters, raising doubts about whether they have the capital to spend when they should be generating profits, and Bloomberg reports that among AI competitors,
there is a growing concern in the market that Alphabet might be falling behind in the race. On the other hand, companies that are making money saw their stock prices rise. Take Microsoft or Oracle, for example. They have essentially maintained a strong trend following their earnings releases. Looking at this, I would judge that the market's future focus will now be on whether a company is actually making money or not.
Yes. How long will the profitability of AI revenue last? I think this is a point of curiosity and concern for investors; what is your take on this? Yes. Demand is solid. So, there is no need to worry. That is how we can view it, and the reason is evident in a recent report released by the Bank of Korea.
The Bank of Korea cited the dot-com bubble as an example. Back then , optical communication companies invested heavily in fiber optic cables, believing an internet era was coming. But when they opened the lid, it turned out that only 2 to 5 percent was actually used. However, things are different now.
Let’s look at today’s data centers. In the first half of this year, the vacancy rate for North American data centers was only 1.4%. More importantly, for both future and existing data centers, we found that more than 80%are already reserved for use by specific companies. This means that demand is rock solid.
Therefore, we don't need to worry about such aspects, and Samsung Electronics also mentioned it when reporting their quarterly operating profit. They stated that next year's HBM supply is already completely sold out. Demand is robust. However, something to note is that debt is growing rapidly; looking at the bond issuance of the Big 5 hyperscalers, it has doubled compared to last year.
All of this is debt. Secondly, orders are concentrated among a few companies. Anthropic and OpenAI account for 38%of the total demand for such cloud services . So, if these companies see a drop in revenue, it is inevitable that demand will fall like a domino. I would advise you to be cautious about these aspects. Yes. Understood.
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