The two major South Korean tech stocks – and significant parts of the country's equity market – have been volatile in recent days, giving a taste of what can happen when concerns erupt about AI and earnings.

The sharp selloff to South Korea’s tech behemoths Samsung Electronics and SK Hynix, which have flourished on the back of the AI story, is not yet a reason to think that the tech forces driving the market are fading, according to BNP Paribas in a recent note.

The two mega-cap stocks are proving to be far more volatile than expected given their size, the French banking group said in a note from William Bratton, head of cash equity research for APAC.

“As an illustrative example, the 13 largest US companies, by market cap, have seen daily price moves greater than 5 per cent, in either direction, in just 3 per cent of the trading days in which their market cap exceeded $1 trillion. In contrast, the comparable percentage for the two South Korean behemoths is an astonishing 49 per cent,” Bratton wrote. “In fact, the South Korean names have already accounted for nearly 10 per cent of the total daily price moves greater than 5 per cent across the trillion-dollar club, despite only accounting for less than 1 per cent of the associated trading days.”

Since the start of 2026, the tech-heavy KOSPI Index of South Korean equities has surged 69.2 per cent. Over the five days to end-9 July, it fell 5.7 per cent. From its late June peak, the index is down by about 20 per cent.

However, the share price movement appears not to have held back capital-raising enthusiasm. In a positive twist late last week, SK Hynix raised $26.5 billion in its American depositary receipt offering, Bloomberg and other media reported on 9 July. The South Korean memory chipmaker recorded the largest ever US first-time share sale by a foreign company. SK Hynix sold 177.9 million ADRs for $149 each. Each ADR is equivalent to a 10th of a Seoul-traded common share. At $26.5 billion, the offering tops Alibaba Group Holding Ltd’s US debut to become the third biggest listing in history, Bloomberg said.

In some ways, the volatility of South Korea's big tech equities is mirrored by that of other tech stocks, for example in the US, when doubts arose about how fast revenues could rise to justify the hundreds of billions of dollars in capital spending.

BNP Paribas’ Bratton said the high exposure of South Korean businesses to the AI story is unusual.

“We recognise that South Korea is uniquely exposed to the current AI-driven memory super-cycle. Across the approximate 320 South Korean companies that we track, the tech sector now accounts for 80 per cent of aggregate [forward 12-month earnings], up from 36 and 17 per cent at the same points in 2025 and 2023. And in terms of market cap, these two sub-industries now represent 63 per cent of aggregate market cap, significantly higher than the 30 per cent as of end June 2025,” he said.

“It is no surprise, therefore, that any uncertainty relating to the continued strength of the memory super-cycle will be immediately reflected in index-level volatility. And we have previously noted that when the tech cycle reverses, the South Korean equity market will face severe headwinds with the scope for a substantial retracement. Despite this risk, however, we believe it is premature to call an end to the forces driving the Asian and South Korean tech sectors,” he wrote.

In an 18 June note from its chief investment office, global wealth management, UBS said that equities in North Asia, particularly Taiwan and South Korea, “should continue to outperform thanks to tech strength.”

Over at RBC Wealth Management, the view of South Korea is sanguine after the recent stock market dramas.

"The current correction in South Korea appears healthy, with Korean equities remaining attractive over the medium-to-long term: South Korea’s KOSPI Index has entered bear market territory, declining more than 20 per cent from its peak in late June, as investors reassess the sustainability of AI-driven gains. Foreign investors have withdrawn over $100 billion from Korean equities, while retail traders have amplified volatility. We view the current correction in South Korea as healthy, and we remain constructive on Korean equities over the medium-to-long term as the country is home to strategic companies in the memory space," it said.

Earnings and caution
Bratton said investor caution could be understood “if the sector was losing earnings momentum or if there was growing uncertainty over the earnings outlook.” 

“But the fundamental backdrop to this headline volatility, and expansion in the implied equity risk premium, is that earnings expectations for the sector – as per Bloomberg consensus – continue to be lifted at a high tempo, even as it has been sold off. In fact, our technology team maintain their view that the current memory super-cycle will sustain its momentum over the near term given the powerful combination of surging demand and constrained supply,” he continued. 

Bratton concluded by saying that he accepted that the tech sector would remain jittery due to earnings momentum and the relative lack of compelling earnings stories in the region. 

“This is likely to continue favouring the NE Asian equity markets (including South Korea) over China and India, and, within China, we prefer the production complex (tech, industrials, and materials) over the consumption sectors,” Bratton said.