AI Market Correction Doesn’t Change the Long-Term Story But Excessive Leverage Needs to Reset

Last month, I posted here that the leverage in the artificial intelligence sector had become too high and that investors needed to look at this market more rationally. At that time, I also mentioned that the AI sector had already accumulated massive profits, and that any market volatility could potentially cause the artificially inflated boom to collapse. I also pointed out that the listing of SK Hynix in the U.S. market had further intensified this situation. In previous financial crises, South Korea’s financial leverage has often appeared as part of the problem, and this time was no exception. The leveraged ETFs related to SK Hynix before its U.S. listing appeared to accelerate the market sell-off and contributed to the sharp decline caused by forced selling. However, I still believe that the demand for artificial intelligence has not yet been fully released. The AI industry remains a seller’s market, and this situation is unlikely to change significantly within at least the next year. At the same time, some publicly traded AI memory companies have already moved away from their fundamentals and are being driven almost entirely by market sentiment. Under these circumstances, even small fluctuations can create large market movements, accelerating the collapse of leveraged positions and triggering further profit-taking, which could eventually lead to a broader market correction. What I want to say now is that the overall market logic has not changed. Any industry that can change people’s habits and lifestyles will experience tremendous growth, just as we have witnessed during the internet era over the past two decades. However, nothing can escape the laws of the market. Unhealthy trends created by excessive leverage and extreme market sentiment during a rising market need to go through significant volatility before returning to a more normal state. Currently, some capital from the AI sector is gradually flowing into high-quality stocks that have been undervalued and unfairly punished, such as certain software companies. However, the market’s ability to adjust and recover is extremely strong. I believe the next major trend will eventually return to the main market narrative. The overall investment logic remains unchanged: technology is still the future of humanity, and it will continue to attract global attention and capital