July 25 Market Report: Alphabet and Tesla Earnings Disappointment Sparks Fears of AI Overinvestment; Semiconductor Sell-Off

Big Tech Earnings Reports Diverge... Semiconductor Selling Persists

On the 24th, the New York stock market showed mixed performance as investor anxiety deepened ahead of earnings reports from major Big Tech companies. While the Dow Jones and S&P 500 indices closed higher for the first time in three trading days, the Nasdaq showed a downward trend for three consecutive days. After international crude oil prices surpassed $100 per barrel before turning downward, inflation concerns were somewhat alleviated. However, fears of overinvestment in artificial intelligence (AI) sparked by Alphabet and Tesla spread across the entire semiconductor sector, increasing market volatility. On this day, Nvidia closed down 0.02% at 208.76 won, and Apple finished down 0.01% at 321.66 won.

Ticker	Price	Change	Market Cap	PER
Nvidia	208.76 won	-0.02%	5.06T won	32.0
Apple	321.66 won	-0.01%	4.72T won	38.9
Alphabet (C)	318.34 won	-0.07%	3.89T won	16.0
Microsoft	381.58 won	-0.02%	2.83T won	22.7
Amazon	233.66 won	-0.05%	2.51T won	29.3
Meta	606.1 won	-0.03%	1.54T won	22.0
Tesla	319.69 won	-0.15%	1.26T won	343.8

The combined market capitalization of the seven major Big Tech stocks listed in the table exceeds 21 trillion won. This is the core axis determining the overall market direction. Nvidia maintained its unshakable position with a market cap of 5.06 trillion won, followed by Apple with 4.72 trillion won. Particularly noteworthy is the failure of Alphabet and Tesla to defend their stock prices. Despite recording solid second-quarter earnings, they failed to meet market expectations and could not avoid stock declines. Alphabet's PER stands at 16.0, indicating relatively little valuation burden, but concerns over slowing revenue growth weighed on the stock.

Tesla's Worst Week... Elon Musk's Trial

Tesla, the leading electric vehicle company, fell 0.15% on the day to close at 319.69 won. CEO Elon Musk is scrambling to prop up the stock price, yet cold market assessments persist. Tesla's price-to-earnings ratio (PER) reaches 343.8. This implies the current stock price reflects 343 years of future net income based on current annual profits. Such high valuation creates a structure highly vulnerable to slowing earnings growth or macroeconomic headwinds. Its accompanying earnings per share (EPS) growth rate also recorded -4709.0%, showing a rapid deterioration in profitability.

Ticker	Price	Change	Market Cap	EPS Growth
Tesla	319.69 won	-0.15%	1.26T won	-4709.0%
Meta	606.1 won	-0.03%	1.54T won	-256.0%
Exxon Mobil	156.89 won	+0.02%	0.65T won	-1505.1%

Earnings deterioration is not a phenomenon limited to Tesla. Social media giant Meta also recorded an EPS growth rate of -256.0%. A sluggish ad market and massive metaverse and AI investment costs are weighing on performance. Conversely, Exxon Mobil, the energy sector leader, rose slightly by 0.02% to trade at 156.89 won, buoyed by rising oil prices. As EPS of major tech stocks falls simultaneously, defensive investment behavior is appearing with some capital moving to high-turnover sectors like energy and consumer staples.

Fears of AI Overinvestment Spread... Semiconductor Sector Hit Broadside

The outlook for the semiconductor industry is also bleak. The poor performance of Alphabet and Tesla immediately led to concerns about overinvestment in artificial intelligence (AI) infrastructure. Consequently, stock prices of major memory chip companies like SK hynix fell sharply. According to the provided data, U.S. semiconductor firm Micron traded up 0.03% at 990.21 won. However, Intel fell 0.02% to 100.23 won, and Advanced Micro Devices (AMD) also dropped 0.02% to 539.69 won.

Ticker	Price	Change	Market Cap	PER / EPS Growth
Micron	990.21 won	+0.03%	1.12T won	22.4 / -
Intel	100.23 won	-0.02%	0.50T won	- / 9865.5%
AMD	539.69 won	-0.02%	0.88T won	185.5 / 16435.6%

Semiconductor equipment companies Lam Research and Applied Materials showed defensive trends, moving flat or rising slightly. However, foundry leader Taiwan Semiconductor (TSM) and ASML have PERs reaching 36.5 and 62.1 times, respectively. This indicates the market has already significantly priced in the semiconductor boom. Jeong Sang-hwi, a principal researcher at Kiwoom Securities, analyzed this as a short-term shock reflecting risk-aversion sentiment due to soaring international oil prices. He diagnosed that concerns about entering the late stages of the AI cycle and slowing profitability are limiting the upside momentum of semiconductor stocks.

Market Volatility Expands... Future Investment Implications

Ultimately, global stock markets face two challenges: macroeconomic uncertainty and the verification of individual corporate earnings. The surge in international oil prices in September could increase inflation pressure and potentially delay the Federal Reserve's rate cuts. In this environment, Nvidia and Microsoft, with clear EPS growth trends, are expected to act as safe-haven assets. Nvidia's EPS growth rate reaches 6599.3%, proving it is a direct beneficiary of AI demand. Microsoft also demonstrated synergy between cloud and AI with a 1551.4% growth rate.

At this stage, investors need to re-evaluate qualitative corporate growth and valuation appropriateness rather than short-term momentum. Risk management must be strengthened for stocks with extreme expectations reflected, like Tesla, which exceeds a PER of 300.

Going forward, additional earnings reports from Big Tech and visible guidance regarding AI investment costs will serve as key variables determining market direction. Geopolitical risks in the Middle East and oil price trends must also be monitored. The fact that oil prices turned downward amid mediation efforts by Pakistan between the U.S. and Iran is a positive signal. However, it must be closely monitored whether the adjustment in technology stocks, including semiconductors, will end as a short-term correction or lead to a long-term valuation downward spiral. Amid the dual pressures of liquidity contraction and earnings slowdown, a time requires selective stock picking by sector and a split-buying approach.