● Tariff War Panic, AI Supercycle Surge
2025~2026 Stock Market Roadmap: Amid Tariff War Risks and the AI Supercycle, “Upward but Polarized” is the Answer
This article contains ① a systematic data comparison on whether Korean stocks are truly undervalued, ② KOSPI and exchange rate bands under three scenarios based on tariff negotiations, ③ the conditions of Korean stocks that foreigners will keep buying, ④ the limitations and sustainability of AI and data center beneficiaries, and ⑤ key points on EPS dilution and structural changes that other media have missed.
The key themes for this year and next include global economic volatility, interest rate paths, a shift in exchange rate regimes, tariff negotiations, and the AI investment cycle.
In conclusion, the stock market is likely to follow a “gradual upward trend with strong polarization,” and a defensive strategy with steady gains is more favorable than seeking huge wins or being overly aggressive.
News Briefing: A One-Page Summary of Next Year’s Investment Environment
The stock market will maintain an upward trend but volatility will increase.
If tariff negotiations are delayed, performance disparities among stocks will be intensified.
The Korea discount has been somewhat exaggerated, and valuation upside assumes ‘improved growth’.
If US inflation reaccelerates, the pace of rate cuts will be limited and stock re-rating will also be constrained.
Foreigners prefer Korean stocks with the capability for “local production/supply chain avoidance”.
Reassessing the Korea Discount: How Valid is the ‘Undervaluation’ Myth?
Recent comparisons of average PER show Korea in the early 13s, Singapore in the mid-13s, the UK at 14, Hong Kong at 11, Taiwan in the mid-20s, and Japan around 19.
The US S&P500 at the high 20s and the Nasdaq 100 at around 30 are definitely higher, but it is hard to conclude that Korea is absolutely undervalued compared to developed nations.
That is, rather than expecting a surge in the KOSPI merely by resolving the ‘Korea discount’, valuation re-rating is possible only when EPS growth aligns with stability in interest rates and exchange rates.
From the perspective of key themes, simultaneous factors include the risk of reaccelerating core inflation amid global economic slowdown, slower pace of interest rate cuts, and upward risks in exchange rates.
The Reason for the Difference Between 1986~2005: The ‘History of EPS Dilution’ Other Media Fail to Address
From 1986 to 2005, the long-term trend of the Korean stock market was almost “flat”.
The main reason was the frequent EPS dilution resulting from numerous capital increases and public offerings.
Although total operating profits of listed companies increased, the growth rate of earnings per share was almost stagnated due to a matching increase in the number of shares.
After 2005, with the liberalization of foreigner investment, enhanced accounting transparency, revision of the Capital Markets Act, and the spread of fund accumulation investments, companies became more conservative about capital increases, recognizing the “expensive nature of equity”.
Since then, the KOSPI has established the basis for structural upward growth, and this structure remains valid today.
Three Tariff Negotiation Scenarios: Guidance for KOSPI and Exchange Rates
Good Scenario: Tensions ease with symbolic investment commitments and phased agreements.
Growth rate can enter the 2% range, KOSPI around 3,500~4,500, and the exchange rate in the 1,200~1,350 won range.
Neutral Scenario: Difficult negotiations, sustained 25% tariffs, with damage dispersed among companies capable of avoiding harm.
Growth rate between 1.3~1.8%, KOSPI stagnating around the 3,000 level, and the exchange rate fluctuating between 1,350~1,450 won.
Bad Scenario: Expansion of retaliatory tariffs, with an increased country risk premium.
Growth rate may fall below 1%, KOSPI declining to between 2,000~2,300, and the exchange rate facing volatility risks from 1,400 to up to 2,000 won.
The key point is the exchange rate.
If the exchange rate breaks upward past 1,400 won stably, the pace of foreign purchases will slow down, and improvements in the capital balance will also be constrained.
US Prices and Interest Rates: Do Not Underestimate the Risk of Reaccelerating Inflation
Tariffs push up import prices, which in turn add upward pressure on core inflation through service prices.
In such a case, the pace of interest rate cuts will slow, and in the worst case, discussions on further hikes may resume.
If the interest rate path becomes gradual, the re-rating of the stock market will be limited, and the growth premium will be reduced in sectors lacking performance confirmation.
Who Will Rise: Conditions of Korean Stocks Purchased by Foreigners
Companies that own local plants or final assembly production bases in the US, thereby capable of avoiding tariffs.
Supply chains for parts, materials, and equipment directly linked to CAPEX in data centers and AI infrastructure.
Areas with high earnings visibility such as power infrastructure, cooling systems, high-performance memory (HBM) and packaging, and network components for AI servers.
Conversely, industries that heavily rely on domestic demand and are highly sensitive to tariffs and exchange rates are vulnerable to downward revisions in earnings estimates.
The AI Supercycle: How Much Further Can It Go?
The expansion of AI data centers and the demand for HBM are structural.
However, after 2–3 years of consecutive high-growth periods, one must check for “premature reflection fatigue” and margin pressures from supply expansion.
Changes in US national security and industrial policy leading to export controls, as well as incentives for local production, also create profitability variables.
Therefore, while AI should be distilled into “performance” rather than just a theme, it is appropriate to concurrently monitor valuation stresses.
Portfolio Strategy: How to Increase Your Survival Rate Instead of Chasing Big Wins
Increase the cash ratio relative to normal levels and use phased buying to take advantage of volatility.
Increase the proportion of dividend and cyclically defensive stocks, and configure a core-satellite portfolio centered on large leading stocks.
It is advantageous to select individual winners for AI beneficiaries, recommending a strategy that mixes selective stock picking or diversified ETFs within themes rather than funds.
In the exchange rate range above 1,350 won, reduce the proportion of industries sensitive to import costs and utilize the hedging effect of stocks with high export proportions.
Checklist: 90-Day Macro Calendar
Official signals from USTR on tariff negotiations and lists of items with potential for retaliation.
US service prices, wage indicators, and trends in inflation expectations.
The Bank of Korea’s interest rate stance and estimates of the effective real interest rate.
The duration of USDKRW stability in the 1,350–1,400 won range and the flow of foreign pre-delivery funds.
HBM prices and capacity utilization, AI server shipment forecasts, and announcements on data center power expansion.
Wage and Cost Variables: Direct Hits to Margins
A scenario of a 4.5% wage increase clearly erodes margins in industries with a high share of labor costs in total expenses.
For listed companies with operating margins around 4–5%, rising costs can directly lead to downward revisions of earnings estimates.
Therefore, priority should be given to checking cost pass-through capabilities, pricing power, and flexibility in fixed costs.
Real Estate vs. Stocks vs. Cash: Hints for Asset Allocation Looking Toward 2026
Under conditions of slowing growth and limited room for lower interest rates, leveraged assets carry high volatility risks.
Real estate, being highly sensitive to interest rates, is better approached conservatively with an emphasis on assets that generate steady cash flow rather than short-term bets.
Stocks can benefit from an upward trend by mixing a defensive core with selectively chosen growth satellite stocks.
High proportions of cash and short-term bonds can serve as opportunity funds during periods of event risk.
Key Points Overlooked by Other Media
The true reason for Korea’s long-term upward trend is not the resolution of undervaluation, but the reduction in capital increases and the improvement in governance since 2005, which mitigated EPS dilution.
The key to valuation upside is the realization of PVGO (present value of growth opportunities), which is a performance-based growth narrative.
In the tariff phase, the ability to localize production equals a premium.
If the duration in the upper 1,350 won range of the exchange rate is prolonged, the country risk premium may be re-evaluated.
< Summary >
Although the KOSPI has a structural upward trend, next year will see significant polarization and volatility.
One should not expect a rapid surge solely from the Korea discount; ultimately, EPS growth along with the stability of interest rates and exchange rates is key.
Depending on the outcomes of tariff negotiations, be prepared for a wide band of 2,000–4,500 for the KOSPI and 1,200–2,000 for the exchange rate.
The stocks that foreigners buy are those with tariff avoidance (localization) capabilities and clear performance in AI infrastructure.
The strategy is to increase cash holdings, focus on dividend/defensive stocks, maintain a core of leading stocks, and selectively approach AI beneficiaries.
[Related Articles…]
Three Ways for Korean Manufacturing to Survive in the Age of Trump Tariffs
The True Profit Structure of the AI Data Center Power Supercycle and HBM
*Source: [ Jun’s economy lab ]
– 경제는 어두워도 이 기업 주가는 오를 겁니다.(ft. 김경원 교수 5부)● Berkshire Cash Hoard, Data Center Credit Bubble, SK Hynix Threatens TSMC
Buffett’s Record Cash Holdings, the New Subprime Potential of Data Center Financial Engineering, and Nomura’s ‘SK Hynix Overtaking TSMC’ Scenario All at Once: Today’s Key Stock Market Insights
Today’s article covers three topics.
First, what Berkshire Hathaway’s record cash holdings and 12 consecutive quarters of net selling signal for the stock market.
Second, the structural risks to the global economy posed by the quietly growing data center financial engineering behind the AI boom.
Third, Nomura’s reasoning and investment strategy points behind the view that ‘SK Hynix’s profits could surpass TSMC’s.’
Linking paths of interest rates and inflation, the AI semiconductor cycle, and flows in corporate and capital markets, we extract only the essential conclusions for today.
Key Briefing (News Format)
Berkshire Hathaway’s cash has reached an all-time high, and its stock strategy shows consecutive quarters of net selling.
Even share repurchases have been halted for several recent quarters, which is interpreted as a signal from Buffett that he is cautious about the current value of the stock market.
The AI boom has led to a surge in data center investments across the United States, and major private equity and asset managers are expanding bond structures collateralized by rental cash flows.
If this structure spreads, the combination of leverage involving ‘real estate × technology × financial engineering’ could increase credit pathway risks during an economic slowdown, prompting a cautionary note.
In the short term, the market remains bullish, and Nomura has predicted that SK Hynix’s profits, driven by HBM leadership, may exceed TSMC’s in certain quarters next year.
Interpreting Buffett’s Signal: What ‘Record Cash’ Indicates
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Berkshire’s cash holdings have reached an all-time high, accompanied by continuous quarters of net selling and a halt in share repurchases.
Details:
- Valuation Signal: The cessation of share repurchases implies that insiders view the current stock price as unattractive.
- Opportunity Cost Management: Despite a preference for control-acquisition deals, there are few opportunities that meet the criteria of price, size, and quality.
- Cycle and Interest Rate Factor: When interest rates are near their peak and cash value is high, large investors choose a selective waiting strategy.
Main Message:
Buffett’s actions focus not on short-term stock prices but on changes in the risk-reward balance.
Although it is hard to definitively say whether the stock market is overheated, the message of ‘keeping the maximum ammunition ready for a major incident’ is clear.
How Far Have AI Data Center Investments Progressed?
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The expansion of data centers, triggered by the demand for AI semiconductors, is absorbing power, land, and capital at a pace that can transform an entire city.
Details:
- Power Intensity: With campus-scale demands of 500MW spreading, utility expansions and PPA prices are rising in tandem.
- Rate of Equipment Replacement: The accelerated GPU generation change increases depreciation and conversion costs, shortening the payback period.
- Capital Structure Shift: Hyperscalers, manufacturers, and private equity are expanding structures that combine leases, project financing, and private credit.
Main Message:
While the demand fundamentals are strong, a ‘triple bottleneck’ of power, time, and capital has emerged, making project risk management even more crucial.
The Most Sensitive Point: The Shadow of ‘Rent→Bond’ Financial Engineering
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Data center rental cash flows are being converted into bonds, and the structure is showing signs of spreading among a wide range of investors.
Details:
- Structure Summary: Private and infrastructure funds hold the data centers, large tech companies become long-term tenants, and bonds are issued based on rental income.
- Advantages: Stability is secured by the credit of big tech, operational expertise is separated from development, and capital efficiency is improved.
- Risk Triggers: Sticky interest rates, a deteriorating rent-to-power cost spread, a slowdown in AI monetization, and accelerated equipment depreciation could worsen coverage.
- System Transition: If leases, ABS, and private credits are distributed to pension funds and insurers, tech corrections could ripple into the credit markets.
Main Message:
As this structure grows, ‘the securitization of real estate leases’ and ‘AI equipment depreciation’ converge within a single portfolio.
Although it is not exactly the same as the subprime crisis, volatility could be amplified once correlations increase.
Short-Term Momentum: Nomura’s Argument that ‘SK Hynix May Outperform TSMC in Profits’
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The view is that SK Hynix’s technological and supply advantage in HBM—a core component of AI semiconductors—will maximize its earnings leverage.
Details:
- Product Mix: An increased proportion of high-value products centered on HBM3E is expected to improve ASP and margins.
- Supply Tightness: Competitors face limitations due to yield issues and slower expansion, meaning price negotiation power may be maintained until 2025.
- Packaging Ecosystem: As bottlenecks in advanced packaging such as CoWoS ease, shipments are likely to accelerate.
- Comparison: TSMC will see increased depreciation and fixed costs as capacity expands, and margins in certain quarters could be affected by the cycle.
Main Message:
The short-term stock market is primarily reflecting the sensitivity of earnings to HBM, and the profit elasticity of the memory supercycle may be steeper than that of foundries.
Scenario-Based Investment Strategy (Barbell Approach)
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Leverage the bullish momentum while simultaneously preparing defenses against credit and interest rate risks.
Details:
- Offensive Side: Maintain exposure to fundamentally sound stocks within the core value chain of AI semiconductors (memory HBM, advanced packaging, substrates, cooling, and testing).
- Defensive Side: Secure a defensive cushion with high free cash flow quality stocks, grid and transmission infrastructure, and regulated asset-based utilities.
- Areas to Avoid: Data center development stocks with high leverage and fixed leasing structures that have low power cost pass-through.
- Bond Positioning: Gradually extend duration in the post-interest-rate-peak environment, while limiting exposure to BBB- or lower credit ratings.
Main Message:
While stock market momentum remains effective, tail risks on the credit side must be managed via hedging.
Checklist: Early Warning Risk Indicators
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Track the ‘inflection’ signals that can be quantified with numbers.
Details:
- Interest Rate and Spreads: Monitor the 10-year vs. 2-year yield curve and whether IG and HY spreads are widening again.
- Power and PPA: Watch for sharp increases in PPA prices in key hubs and the pace of new connection waitlists.
- Leases and Cap Rates: Observe rising data center cap rates and instances where long-term lease refinancing fails.
- AI Monetization: Compare the speed of big tech’s improvement in gross margins from AI revenues versus CAPEX guidance.
- HBM Pricing and Utilization: Look for fatigue in upward price adjustments and disclosures from major companies regarding expansion and yields.
Main Message:
When these indicators deteriorate simultaneously, the volatility of the financial engineering structure is likely to increase.
Point Not Emphasized Elsewhere
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Data centers possess characteristics of both real estate and manufacturing.
Details:
- From a Real Estate Perspective: Land, power, and permits are key to value, and while vacancy risk is low, sensitivity to interest rates and cap rates is high.
- From a Manufacturing Perspective: Rapid equipment depreciation and frequent technology upgrades can lead to mismatches between leasing and payback periods.
- Revenue Structure: Fixed rental contracts can stress both lessors and tenants when power costs and upgrade expenses surge.
- Potential Solutions: Revenue models linked to sales, power cost pass-through, or uptime performance can help mitigate risk.
Main Message:
When ‘real estate-style leverage’ is built on top of ‘manufacturing-style depreciation,’ economic stress can be amplified.
The details of the contract structure determine 80% of the risk.
Connecting with the Global Economic Context
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Interest rates and inflation dictate the valuations of data center and AI investments.
Details:
- Scenario of Falling Interest Rates: Lower capital costs expand the upper end of valuations and ease credit risks.
- Scenario of Persistently High Interest Rates: Rising cap rates, refinancing pressures on rents, and reduced project IRRs are expected.
- Reignition of Inflation: Rising power and construction costs put pressure on the top end, deepening the ‘race against time’ in monetization.
Main Message:
Ultimately, the macro environment determines the investment payback period.
Continuously monitor the interplay between interest rates, power costs, and demand growth rates.
Investor Checkpoints (Execution List)
Header
Manage positions and risks with numerical discipline.
Details:
- Exposure Map: List the correlations within the portfolio among ‘AI semiconductors – data centers – credit.’
- Hedging: Consider introducing hedges for interest rate and credit spreads during periods of rising volatility.
- Quality: Check free cash flow margins, net cash positions, and contract structures (pass-through and refinancing provisions).
- Trades: In momentum phases, track earnings and guidance surprises, but realize profits if discrepancies between news and numbers widen.
Main Message:
Capture gains in the bullish market while carefully managing the tails of leverage and credit interlinkages.
Summary of Perspectives
Berkshire’s record cash holdings signal that ‘there is still plenty of reason to wait.’
Data center financial engineering represents efficient capital allocation as well as a potential new pathway for credit risks.
In the short term, the market is driven by the momentum around HBM, and the earnings elasticity within the AI semiconductor chain, exemplified by SK Hynix, remains intact.
< Summary >
Berkshire is maximizing cash while waiting for appropriate price and risk opportunities.
AI data centers face triple bottlenecks from power, capital, and depreciation, with an expanding lease-to-bond financial engineering structure that could create a new route for credit risks.
Short-term momentum is led by HBM, and Nomura sees a surge in SK Hynix’s earnings.
The strategy is barbell-like, capturing momentum while hedging against tail risks stemming from credit and interest rates.
Key SEO Keywords: Global Economy, Interest Rates, Inflation, Stock Market, AI Semiconductors.
[Related Articles…]
Berkshire’s Record Cash and What It Signals for the End and Beginning of a Market Cycle
Beyond NVIDIA: Who Will Benefit from the Data Center Power Turmoil?
*Source: [ Maeil Business Newspaper ]
– [홍장원의 불앤베어] 워런버핏 버크셔, 또 현금 사상최대. 노무라 “SK하이닉스 이익 TSMC 추월한다”
