Meta's AI Service Plans Spark Overinvestment Fears, South Korean Stocks Plunge 7.9%

South Korean stock markets plunged on July 2, 2026, with the KOSPI index falling 7.9% after triggering a trading halt due to concerns over AI infrastructure overinvestment and competition.

Meta's (Facebook's parent company) decision to offer AI computing power and model services to external clients, entering competition with giants like AWS, Microsoft Azure, and Google Cloud, has raised market anxieties. While Meta's stock rose on the news, the broader market feared an oversupply of AI computing power, causing the Philadelphia Semiconductor Index to drop 6.3% and impacting major chipmakers.

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Meta considering selling excess AI computing power shows the company may have difficulty finding proper uses for it, or that AI computing power may have been overbuilt, which is bad news for related stocks in markets like South Korea.

In Asia, semiconductor stocks followed suit. South Korea's SK Hynix and Samsung Electronics saw significant declines of 14.6% and 9.1% respectively. These companies heavily influence the KOSPI, contributing to its sharp fall. Analysts like Lin Wei-sen of UBP suggested Meta's move might signal difficulties in utilizing its computing power or an overbuilt infrastructure, posing a risk to related stocks.

Further pressure came from reports of Apple planning to purchase chips from Chinese memory manufacturers, potentially impacting Samsung and SK Hynix's competitive edge. Adding to the market's unease, Michael Burry, the investor who inspired "The Big Short," criticized South Korea's "Grand Leap 3 Super Projects" AI infrastructure investment as a potential end to the current market momentum, suggesting it was "the beginning of the end."

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I think this is the beginning of the end, the momentum will eventually run out, it's only a matter of time.