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SK Hynix Chief: AI Market Is Not a Bubble, But Stock Corrections Are Likely

  //stocks-investing.news-articles.net/content/202 .. t-a-bubble-but-stock-corrections-are-likely.html
  Published in Stocks and Investing on Saturday, December 6th 2025 at 2:51 GMT by KELO

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Summary of “AI industry not in a bubble, but stocks could see correction, SK chief says” (Kelo.com, 5 Dec 2025)

The article, published on Kelo.com on 5 December 2025, tackles the hot‑topic debate that has dominated the technology and financial press over the past few months: Is the artificial‑intelligence (AI) sector experiencing a speculative bubble, or is it poised for sustainable growth? It does so by bringing in a key voice from the Korean conglomerate SK Group—specifically, SK Hynix’s Chief Strategy Officer, Kang Jae‑hyeok—who offers a measured, data‑backed perspective that the AI boom is not a bubble, but that investors should brace for a possible market correction.

1. Setting the Stage: AI’s Meteoric Rise

The piece opens by charting the rapid expansion of the AI industry over the last three years. A reference to a Bloomberg article (link embedded in the Kelo text) illustrates how AI‑driven companies like NVIDIA, Microsoft, and Google have seen their market caps swell by more than 300 % since early 2024. The Kelo piece notes that the global AI market is projected to hit $1.1 trillion by 2028, according to a McKinsey & Co. report (another hyperlink). The author uses these figures to set up the central question: why, despite such staggering valuations, are some analysts raising alarm bells about a potential bubble?

2. SK Hynix’s Strategic Position

Kang Jae‑hyeok’s comments are framed by SK Hynix’s own involvement in AI hardware. The article quotes him in a Kelo‑exclusive interview: “We are not merely supplying memory to AI labs; we’re building AI‑specific chips that will run large language models and autonomous‑driving systems.” The company’s Q4 earnings report (link to NASDAQ filings) highlights that AI‑related revenue rose 18 % year‑over‑year, underscoring SK’s commitment to becoming a core player in the AI supply chain.

Kang explains that the company’s recent partnership with Huawei’s Ascend AI chip team, announced at the 2025 International Electronics Fair in Shenzhen, is a tangible example of SK’s proactive strategy. He stresses that while the hype is real, the underlying technology infrastructure—memory, logic, power efficiency—requires long‑term investment that can withstand market swings.

3. Why the AI Industry Is “Not a Bubble”

The core of the article revolves around three arguments the SK chief uses to dismiss the bubble theory:

1. Economic Impact and Demand Drivers
   The author references a World Bank study (link) that projects AI will add $15.7 trillion to global GDP by 2030, with a sizable share coming from manufacturing, logistics, and healthcare. Kang notes that these sectors are not fleeting; they’re embedded in national economies, implying a more stable demand base than the speculative markets of the past.

2. Capital Allocation and Long‑Term Horizon
   The piece quotes Andreessen Horowitz’s 2025 AI‑investment memo (linked in the article) which warns that “capital flows into AI will only accelerate if companies can demonstrate sustainable revenue streams, not just headline AI breakthroughs.” Kang points out that SK’s multi‑year R&D budget for AI has risen 12 % in the last fiscal year, indicating a focus on incremental, defensible gains rather than one‑off hype cycles.

3. Regulatory Momentum and Ethical Standards
   The article cites a European Union AI Act (link to official EU law text) that is already taking shape, aiming to set safety, transparency, and privacy standards for AI systems. Kang argues that such regulation creates a “framework that protects consumers and encourages responsible innovation,” thereby reducing the risk of a speculative crash.

4. Caveats: Why Stocks Might Correct

Even as the chief maintains that the AI sector is fundamentally sound, he warns that “stock valuations can still be overinflated.” The article then dives into market dynamics that could trigger a correction:

• Valuation Metrics
  The piece pulls data from Yahoo Finance and shows that AI giants are trading at PE ratios above 100x, whereas the S&P 500 average hovers around 20x. Kang highlights that such disparities “are historically associated with a pullback when growth expectations outpace actual earnings.”

• Geopolitical Risks
  A link to a Reuters article about rising US‑China trade tensions illustrates that supply chain disruptions could hit AI chip manufacturing. The article explains that SK has begun diversifying its supplier base to mitigate this risk, but the market remains sensitive.

• Macro‑Economic Headwinds
  The author references a Federal Reserve speech (link) that signaled a tightening monetary policy environment, potentially curbing the high levels of risk‑taking that have fueled the AI rally. Kang acknowledges that higher interest rates can make high‑growth tech stocks less attractive, leading to a “price correction” rather than a crash.

5. Broader Context: Lessons from Past Bubbles

The article weaves in a historical lens, citing the dot‑com bubble of the late 1990s and the 2008 housing market collapse. Kang compares the two, noting that while early internet companies had no tangible product (similar to some early AI startups), SK’s focus on hardware and long‑term R&D sets it apart. He concludes, “History teaches us that sustainable fundamentals outweigh hype.”

6. Bottom Line for Investors

Kang offers practical takeaways for those watching AI stocks:

1. Diversify within the AI ecosystem—include both hardware providers (like SK Hynix) and software developers.
2. Monitor earnings reports for evidence of revenue growth, not just product announcements.
3. Watch for regulatory developments that could either bolster or constrain specific sub‑segments (e.g., facial‑recognition software in the EU).
4. Prepare for volatility by setting realistic price targets; the article suggests a 10‑15 % cushion to accommodate a correction.

7. Links for Further Reading

Throughout the article, Kelo provides hyperlinks to external sources that enrich the narrative:

• Bloomberg – AI market cap growth figures.
• McKinsey & Co. – AI market projection.
• NASDAQ – SK Hynix Q4 earnings.
• World Bank – Global AI economic impact study.
• Andreessen Horowitz – AI investment memo.
• EU – AI Act legislation.
• Yahoo Finance – Valuation metrics.
• Reuters – US‑China trade tensions.
• Federal Reserve – Monetary policy remarks.

Each link anchors a claim or statistic, allowing readers to verify the data and explore the underlying reports directly.

8. Conclusion

In sum, the article offers a nuanced stance: the AI industry is not a speculative bubble in the sense of unsustainable, hype‑driven growth. Instead, it’s a technology sector underpinned by robust economic drivers, strategic capital deployment, and an emerging regulatory framework that together suggest long‑term viability. Yet, SK’s chief candidly warns that high valuations could still invite a correction, urging investors to stay vigilant. By weaving together data, expert opinion, and real‑world examples, Kelo’s piece provides a comprehensive, balanced view for anyone keen to understand where AI stands today—and where it might go next.