[R&E] TSMC's Record-Breaking CAPEX Announcement Drives KOSPI's 10-Day Record Rally: Attention on Sector Rotation Triggered by AI Infrastructure

[R&E: Research & Epoch]
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Market Overview: Key Indicators and Trends

The U.S. stock market closed higher the previous day, led by tech stocks, driven by foundry leader TSMC's stronger-than-expected earnings and the announcement of aggressive investment plans. Semiconductor equipment stocks showed particular strength on expectations of benefiting from AI infrastructure expansion. On the previous trading day, the domestic stock market continued its historic rally with the KOSPI index breaking a new high for 10 consecutive trading days and approaching the 4,800 mark, fueled by this positive global momentum and massive net buying by institutional investors. However, caution is required in the short term regarding upward pressure on market interest rates and expanded exchange rate volatility, as the Bank of Korea's Monetary Policy Board unanimously froze the base rate at 2.50% the previous day and expressed a stronger-than-expected hawkish stance by removing phrasing that anticipated a rate cut. Today's market is expected to continue a solid upward trend based on the strength of the AI-driven IT hardware industry.

Key Industry Issues and Insights

At the forefront of the global semiconductor industry, TSMC demonstrated strong confidence in the AI infrastructure expansion cycle by revising its AI accelerator revenue CAGR upward from around 45% to the mid-to-high 50% range, and revealing plans to execute a 2026 CAPEX of up to $56 billion, significantly exceeding market expectations. This is positively impacting the overall domestic HBM and advanced packaging value chains, and is particularly expected to accelerate the first-quarter earnings turnaround for materials and components companies entering an inflection point of memory industry improvement, such as Soulbrain and Wonik QnC.

In the automotive sector, software-defined vehicle (SDV) and robotics momentum are being highlighted, strengthening the premium for Kia, which received the highest valuation among legacy OEMs and saw its fair value upgraded to 220,000 won. Meanwhile, in the chemical sector, restructuring effects from the prolonged industry slump are materializing, with the price of BD (butadiene), a core raw material for synthetic rubber, surging +30% month-over-month and spandex utilization rates improving to 85%. Consequently, interest in sector top picks such as Kumho Petrochemical is increasing. Along with this, as geopolitical risks are highlighted following President Trump's remarks on a $1.5 trillion increase in defense spending, new growth engines for domestic defense-related companies are becoming meaningfully prominent, with Korean Air's aerospace division revenue growing 113% year-over-year to record 308.2 billion won, driven by the reflection of defense orders.

Market Signals

• TSMC CAPEX Guidance Upgraded: Reflecting strong AI infrastructure demand, TSMC provided a 2026 annual CAPEX guidance of up to $56 billion and revised its AI accelerator revenue CAGR upward to the mid-to-high 50% range.
  KOSPI Hits New High for 10 Consecutive Trading Days: On the previous trading day, the KOSPI index rose by +1.58%, breaking its all-time high for 10 consecutive trading days, and continued a bullish rally with the index level approaching 4,800pt.
  Bank of Korea Freezes Base Rate and Strengthens Hawkish Stance: The Bank of Korea unanimously froze the base rate at 2.50% during the January Monetary Policy Board meeting, and clearly demonstrated a hawkish monetary policy stance as the number of members hinting at the possibility of a rate cut within the year decreased from three to one.

Epoch View: Investment Implications

TSMC's unprecedented AI infrastructure investment plan suggests that the structural trend of improvement in the semiconductor industry will continue even after 2026. Rather than worrying about short-term overheating, an effective strategy for investors is to expand their weighting centered on domestic materials and equipment companies expected to show a definitive earnings turnaround within the AI and HPC (High-Performance Computing) value chains. At the same time, as the upside risk of domestic interest rates has increased due to the Monetary Policy Board's hawkish decision, there is a need to secure portfolio defense through financial stocks and stable large-cap export stocks that are announcing active shareholder return policies such as definitive dividends and treasury stock cancellations. It is also a time to pay high attention to sectors where structural improvements and geopolitical momentum overlap, such as shipbuilding equipment and aerospace.

This content was generated through News Epoch's proprietary AI algorithm, which tracks and analyzes public data from major domestic securities firms' research centers in real time. It is an objective summary based on collected data and does not constitute a solicitation or recommendation for investment in specific stocks.