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AI Sector Not Yet in Bubble Territory, According to SK Group Chairman

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  Published in Stocks and Investing on Tuesday, December 30th 2025 at 3:29 GMT by reuters.com

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AI Isn't a Bubble – Yet - But Expect a Correction, Says SK Group Chief

The explosive growth and soaring valuations within the artificial intelligence (AI) sector have understandably sparked concerns about a potential bubble. However, according to Chey Tae-won, chairman of South Korea’s SK Group, one of the country’s largest conglomerates, an outright “bubble” hasn't formed yet. While acknowledging that a correction in AI stock prices is likely and even necessary for sustainable growth, Chey believes the underlying technological advancements driving the sector are fundamentally transformative and justify significant investment.

The Reuters report, published December 5th, relays Chey’s comments made at a SK Group event. His perspective carries weight given SK Group's substantial investments in AI technologies, including its ownership of SK Telecom, a major telecommunications company, and its ventures into semiconductors and cloud computing – all crucial components of the AI ecosystem. Chey’s assessment offers a nuanced view that contrasts with some more alarmist predictions surrounding AI stock valuations.

The Case Against an Immediate Bubble:

Chey's argument against a full-blown bubble rests on several key points. Firstly, he emphasizes the genuine and ongoing innovation within the AI field. The rapid advancements in generative AI models like those powering ChatGPT (developed by OpenAI, which Microsoft has heavily invested in – see related Reuters article) are not simply hype; they represent significant breakthroughs with tangible applications across numerous industries. These include everything from drug discovery and financial modeling to autonomous vehicles and personalized education.

Secondly, he highlights the substantial demand for AI capabilities. Businesses across sectors are actively seeking ways to integrate AI into their operations to improve efficiency, reduce costs, and create new products and services. This widespread adoption fuels a real need for AI infrastructure, software, and talent – justifying investment in companies developing these solutions. The report notes that this demand is only expected to increase as AI technology matures and becomes more accessible.

Finally, Chey points out the significant capital expenditure being poured into AI research and development globally. Governments and private entities alike are recognizing the strategic importance of AI and are willing to invest heavily in its advancement. This ongoing investment signals a long-term commitment to the sector, further supporting its growth potential. This aligns with broader trends observed by analysts who note that governments worldwide are implementing national AI strategies (as detailed in this World Economic Forum article).

The Inevitable Correction:

Despite his optimism about the underlying fundamentals of the AI industry, Chey doesn't dismiss the possibility of a correction. He believes that current valuations for many AI-related companies have become stretched and unsustainable. The frenzy surrounding AI has led to speculative investment, pushing stock prices far beyond what can be justified by current earnings or near-term projections.

This sentiment is echoed by other analysts who are observing inflated price-to-earnings ratios and a disconnect between market enthusiasm and actual financial performance for some AI companies. The rapid rise in valuations also makes these stocks particularly vulnerable to shifts in investor sentiment, economic downturns, or disappointing news from individual companies.

Chey’s prediction of a correction isn't necessarily negative. He views it as a necessary process that will help to “reset” the market and separate truly innovative and sustainable businesses from those riding solely on hype. A correction would likely lead to a more realistic assessment of AI company valuations, encouraging investment in companies with solid fundamentals and long-term growth potential. It could also create opportunities for investors who are willing to weather the volatility and invest in promising AI technologies at more reasonable prices.

SK Group's Position & Future Outlook:

SK Group’s own significant investments in AI demonstrate their belief in the sector’s long-term prospects. Their focus areas include semiconductors (critical for AI chip development), cloud computing infrastructure, and generative AI applications. Chey emphasized that SK Group will continue to invest strategically in these areas, focusing on technologies with clear commercial viability and a potential to create lasting value.

The report suggests that Chey’s comments are intended to provide reassurance to investors while also tempering expectations. He acknowledges the risks associated with investing in rapidly evolving sectors like AI but remains confident in the transformative power of the technology and its ability to drive economic growth. He believes that a period of consolidation and correction will ultimately strengthen the AI industry, paving the way for more sustainable and long-term success.

Conclusion:

Chey Tae-won’s perspective offers a valuable counterpoint to the narrative surrounding an imminent AI bubble. While acknowledging the potential for a market correction, he maintains that the underlying technological advancements and demand for AI solutions are real and substantial. His comments suggest that investors should approach the AI sector with caution, focusing on companies with strong fundamentals and realistic growth prospects, rather than chasing speculative gains. The coming months could see volatility as the market adjusts, but Chey’s view suggests a long-term positive outlook for the AI industry overall.

I hope this article provides a comprehensive summary of the Reuters report and its context!