The world’s hottest stock market took a tumble Monday as the very mention of a tax on AI profits derailed South Korea’s KOSPI index.
The index has jumped an astonishing 193% over the past 12 months, driven by the artificial intelligence boom and two of the world’s largest memory players—Samsung and SK Hynix.
It was all going swimmingly on Monday, too, and the index was within touching distance of hitting the 8,000 mark.
That was until a South Korean official floated the idea of giving excess corporate profits from AI to the country’s citizens as a sort of national dividend.
“The fruits of the AI infrastructure era are not solely the result of specific companies,” Policy Secretary Kim Yong-beom said in a post on Facebook, the country’s Chosun Daily newspaper reported. “A portion of these fruits should structurally be returned to the people,” he added.
The KOSPI quickly slumped 5% before recovering to close down 2.3% for the day as the plan appeared to be related to excess tax revenue. The presidential office later said the comments reflected Kim’s “personal opinion,” the newspaper reported.
Still, the very concept of an AI windfall tax—similar to that imposed by European countries on oil companies following Russia’s invasion of Ukraine in 2022—is enough to spook markets.
For U.S. investors, it’s probably not worth losing any sleep over—at least not yet. The large hyperscalers—Amazon, Meta, Alphabet, and Microsoft—are largely putting their AI profits back into capex spending. And such a policy making it through Congress is far-fetched anyway.
Write to Callum Keown at callum.keown@barrons.com
