[R&E] Opening a New Investment Era Amid Contrasting Trends: AI, Space, and the Rediscovery of Traditional Powerhouses

[R&E: Research & Epoch]

This is News Epoch's signature report that opens a new era of investment (Epoch) by analyzing securities firms' research (Research).

Market Overview: Key Indicators and Trends

Global stock markets are continuing a strong upward rally, driven by the reaffirmation of the Federal Reserve's (Fed) dovish stance and expectations of a soft economic landing. While the US Dow Jones Industrial Average rose by 1.23%, breaking its all-time high, the domestic stock market also showed a record-breaking upward trend, reflecting the recovery of the semiconductor industry and the prospect of expanding infrastructure demand due to the growth of the AI industry. The KOSPI closed at 4457.52pt (+3.43%) and the KOSDAQ at 957.5pt (+1.26%), with foreign investors in particular providing solid support to the market's downside by recording net purchases of 2.167 trillion KRW. Despite concerns over a partial slowdown in US manufacturing indicators, overall investor sentiment clearly favors risk assets.

Key Industry Issues and Insights

The automotive industry has proven its underlying strength through solid sales performance of traditional internal combustion engine and hybrid vehicles, even amid the Chasm phenomenon, which is a temporary stagnation in demand in the electric vehicle market. According to an analysis of major manufacturing companies, global sales volume in 2025 maintained a level of 7.27 million units, and the robust sales of SUVs and high-value-added models, particularly in the North American market, stood out. In the case of Kia, it achieved a record-breaking performance, exceeding 3.13 million units in annual sales, marking its highest sales ever. Meanwhile, the strategy of internalizing AI capabilities, confirmed through management's New Year's addresses, suggests that securing a super gap through the development of AGI (Artificial General Intelligence) beyond simple manufacturing has become an essential condition for corporate survival.

On the other hand, the secondary battery industry is expected to inevitably face short-term earnings pains. Despite generating sales of around 5.4 trillion KRW, the Q4 2025 earnings of major battery manufacturers are highly likely to swing to a loss, recording an operating deficit of approximately 118 billion KRW. This figure signifies that the deficit would deepen even further if subsidy benefits were excluded, and it is analyzed that the industry is going through a transitional period due to the adjustment of expectations in the downstream market.

The semiconductor and future infrastructure industries are directly benefiting from the acceleration of the AI transition. Pricing power is strengthening, centered on companies that have secured unrivaled supply stability in the High Bandwidth Memory (HBM) market, and demand for high-performance semiconductors remains robust, to the extent that there are forecasts that the factory price of next-generation graphic devices will approach 5,000 dollars. Such AI investments naturally lead to a surge in electricity demand, providing strong momentum to energy infrastructure industries such as nuclear power generation and Battery Energy Storage Systems (BESS).

Today's Key Fact Check

1. Strengthening pricing power of next-generation semiconductors: Due to the explosion in demand for high-performance GPUs and HBMs, major manufacturers are expected to implement massive price increases in the first quarter of 2026, which is expected to directly lead to improved profitability in related industries.

2. Short-term downward earnings in the secondary battery industry: As the Q4 operating profits of major battery companies fall below market expectations and are expected to swing to a loss in the aftermath of the slowdown in electric vehicle demand, a short-term valuation re-rating is underway.

3. Infrastructure expansion of the global space market: Within the space industry, which is estimated to be worth around 800 trillion KRW as of 2024, the satellite communications and launch vehicle sectors are emerging as essential infrastructure, and the securing of launch vehicle technology by related domestic companies is becoming visible.

Epoch View: Investment Implications

The current market is in a paradigm shift where the macro environment of the Fed's monetary policy easing is combined with the micro momentum of the AI technology revolution. The fact that Hyundai Motor Group has declared AI internalization as a survival strategy and semiconductor companies are exercising overwhelming pricing leadership clearly shows where investors should focus.

In particular, the power shortage triggered by the expansion of AI data centers has elevated nuclear power and renewable energy infrastructure from simple utilities to the realm of growth stocks. Investors need to realign their portfolios centering on semiconductors and energy infrastructure whose actual earnings have been confirmed, and undervalued blue chips that are expected to benefit from the January effect, rather than secondary batteries which face short-term profit-taking pressure.

This content was created through News Epoch's proprietary AI algorithm, which tracks and analyzes public data from research centers of major domestic securities firms in real time. We clarify that this is an objective summary based on the collected data and does not constitute a solicitation or recommendation to invest in any specific stock.