SK Group's Chey Tae-won: "AI industry not in a bubble”

Stocks in artificial intelligence (AI) companies may face pressure after growing too fast and too much, but the industry is not in a bubble, Chey Tae-won, chairman of the South Korean conglomerate that owns memory chip maker SK Hynix, said, according to Reuters.

Concerns about the overvaluation of AI companies have begun to weigh on financial markets, raising questions about whether massive investments in AI are currently profitable.

"I don't see a bubble in the AI industry,” Chey Tae-won, chairman of SK Group, told a forum in Seoul when asked by the Bank of Korea governor about concerns about AI bubbles. The SK Group chief added: "When we look at the stock markets, however, they have risen too fast and too much, and I think it is a natural process to have a correction period. AI stocks are rising beyond their fundamental value.”

Chey Tae-won explained that "overvaluation” of company stocks is nothing new for a growing industry, and the development of AI will lead to significant productivity gains.

• SK Hynix shares up 214% in a year

SK Hynix, a company that supplies high-end memory chips to US giant Nvidia, has risen 214% in a year on strong demand for its products from companies building AI data centers and investing trillions of dollars.

In October, the South Korean conglomerate reported a record quarterly profit, helped by the AI boom, and said it had sold off all of its chip production next year, expecting an extended chip "supercycle.”

Last year, SK Hynix pledged to invest 103 trillion won ($74.6 billion) by 2028 to strengthen its chip business, focusing on artificial intelligence. The company also plans to invest 80 trillion won by 2026 to invest in AI, semiconductors and shareholder rewards, while streamlining its more than 175 subsidiaries.