Global markets mixed as AI sector reprices amid divergent fundamentals

From the close on October 20 to the early morning of October 21, global markets delivered no unified directional signal. The Dow Jones reached a new all-time high, while the Nasdaq remained nearly flat. The Korean stock market, which had closed down 3.73% the previous day, rebounded by 3.79% in early trading the next day. Oil prices surged above $101, briefly retracing to $95, and closed down just 0.37%.

Putting these prices together, it’s not that “AI was sold off,” but rather that the same pool of money is shifting positions—exchanging assets that rely on external funding to sustain their narrative for assets that already have revenue and cash on hand. SpaceX and 3M’s earnings reports happened to place this dividing line side by side on the same night.

On the day, 3M rose 5.78%, serving as one of the primary drivers of the Dow Jones Industrial Average. The earnings report itself was modest: third-quarter sales of $6.6 billion, up 1% year-over-year; adjusted earnings per share of $2.50, up 12% year-over-year; and the full-year adjusted EPS guidance raised to $9.10–$9.15.

What really sparked the stock price surge was another item in the same announcement: 3M is expanding its collaboration with Amazon to scale up data center products such as optical interconnects, and is issuing warrants for up to 3.2 million common shares, exercisable based on cumulative product sales of $6 billion over the next seven years.

This announcement indicates that AI orders have penetrated companies in the "old economy." The difference lies in the payment method. 3M uses operating cash flow to build capacity and secure orders, with Amazon as its customer. The market’s valuation of 3M reflects the scenario where orders are signed and cash has been received.

On the same night, Eli Lilly rose 3.49% to a record high, Amgen increased 3.29%, the healthcare sector climbed approximately 2.3% to a record high, and the Russell 2000 gained 1.65%. In contrast, communication services fell 0.89%, information technology declined 0.34%, Meta dropped 1.59%, and Apple slid 1.00%.

The new high in the Dow resembles a classification rather than a "revival of the old economy." One category of orders is tied to existing cash flows, while another is tied to construction projects still requiring further financing. Capital has lifted the former and left the latter behind.

After hours, SpaceX released its second earnings report since going public. Third-quarter revenue reached $14.575 billion, a 161% year-over-year increase, surpassing the market expectation of $12.8 billion. AI business revenue amounted to $7.56 billion, up approximately 830% year-over-year, surpassing the combined revenue of Starlink and launch services for the first time. Net profit was $4.404 billion, compared to a net loss of $1.054 billion in the same period last year.

Capital expenditures also surged to $19.593 billion, up 185% year-over-year, primarily directed toward AI computing power. The market responded positively, with the stock rising nearly 8% to around $159 in after-hours trading.

The reason is straightforward: AI revenue growth is 830%, while capital expenditure growth is 185%—revenue is outpacing spending. This is the structure the market is currently willing to pay a premium for.

On the same night, South Korea’s AI cloud provider Elice closed its first day of trading in Seoul down 32%, then rose 16% in early trading on the 21st. In the U.S. market, Micron fell 0.98%, ASML dropped 0.99%, Applied Materials declined 1.97%, KLA fell 2.80%, and Arm slid 3.07%.

AI has not been abandoned overall; what has been repriced is the category where expenses have been incurred but revenues have yet to be proven. This distinction can be tested using two growth rates: whether AI-related revenue growth exceeds capital expenditure growth. If Meta’s capital expenditures continue to be revised upward tonight, while revenue growth remains below 30%, this dividing line will shift from marginal assets like Elice to hyperscale providers.

On the 20th, the KOSPI closed down 3.73% at 5,552.74 points, having fallen as much as 4.76% intraday to 5,493.24 points—the lowest close since April 7. On that day, retail investors net bought KRW 898.2 billion, while foreign investors net sold KRW 533.3 billion and institutional investors net sold KRW 1.0048 trillion.

In the early morning trading on the 21st, the index reversed direction. At 9:32 a.m. KST, the KOSPI rose 3.79% to 5,763.03 points, Samsung Electronics increased 6.15% to KRW 224,500, and SK Hynix rose 7.44% to KRW 1,314,000. Foreign investors net bought KRW 447.1 billion, institutions net bought KRW 137.7 billion, and retail investors net sold KRW 676.3 billion.

Buyers and sellers swapped roles overnight. On the 20th, retail investors absorbed the supply; on the 21st, foreign capital and institutions did.

There is another detail: foreign investors were net sellers overall over the past 20 days, yet they continued to be net buyers of Samsung Electronics for the third consecutive trading day, purchasing KRW 198.9 billion, KRW 270.8 billion, and KRW 383.5 billion respectively over the three days, while continuing to sell SK Hynix. According to Korean media reports, J.P. Morgan believes that Korean equities are no longer overvalued, but the slowdown in corporate buybacks has been a key factor behind recent declines—Samsung’s buyback program has been completed, and Hynix’s is nearing its end.

Looking at these two days together, the dominant variable appears to be positioning rather than the fundamental fundamentals of Korean AI. Since late August, buy pressure supporting the index has primarily come from buybacks; once buybacks withdraw, even minor movements are easily amplified. If foreign investors resume net selling after tonight’s Meta earnings report, tomorrow morning’s rebound is more likely a short squeeze rather than a trend reversal.

The WTI front-month contract reached a intraday high of $101.37, its highest level in over a month. Following reports that U.S.-Iran negotiations could see a breakthrough as early as this week, oil prices briefly dropped to $95.20, a decline of more than 6%. After the reports were denied, prices rebounded to around $98, closing at $98.18, down 0.37%. Brent closed at $109.16, down 0.36%.

The 10-year U.S. Treasury yield fell 3 basis points to 5.11%, while the 2-year yield rose 1 basis point to 4.78%. The U.S. Dollar Index declined 0.27% to 101.70. Spot gold fell 0.38% to $4,124.48, and spot silver rose 1.61% to $57.98. Newly reported September housing starts dropped 5.2% month-over-month, the lowest level since May.

A decline in long-term yields does not equate to easing inflation. The two key drivers today were a drop in oil prices and risk-off buying prompted by fiscal concerns in France. Meanwhile, 2-year yields are still rising, indicating the market has not yet priced in an end to rate hikes.

The decline in gold and rise in silver indicate that overall risk-off demand has not increased. Silver has stronger industrial attributes, as it is used in photovoltaics and data centers, while gold has stronger monetary attributes and is more sensitive to changes in real interest rates.

A testable reading is that the marginal pricing power over inflation now lies in the Strait of Hormuz, not in the Federal Reserve’s conference room. If WTI reclaims $100 and holds there for several trading days, the divergence between the Dow rising and the Nasdaq not rising could reverse.

Meta and Tesla both reported their third-quarter earnings after hours on the 21st on U.S. markets.

In Q2, Meta reported revenue of $60.801 billion, a 28% year-over-year increase; capital expenditures of $30.12 billion; and free cash flow of $1.75 billion, compared to $9.02 billion in the same period last year. The company previously provided a capital expenditure guidance of $130 billion to $145 billion for 2026. Market expectations for Q3 are revenue of approximately $63.2 billion, up about 23% year-over-year, and earnings per share of approximately $6.54, down about 10% year-over-year.

The most striking figure is free cash flow. Capital expenditures in the second quarter have nearly reached the operating cash flow for the same period, leaving only $1.75 billion in free cash flow. If capital expenditures rise further in the third quarter, this number will shrink even more.

Tesla delivered 486,500 vehicles in Q3, a 2% year-over-year decline, with market expectations of approximately $27.8 billion in revenue and $0.43 in earnings per share. The focus is not on delivery numbers, but rather on automotive gross margin and Robotaxi operational data.

Both companies are answering the same question: Can revenue growth catch up to capital expenditure growth? SpaceX’s answer last night was “yes,” and the market responded accordingly. Now Meta must present its own version. If Meta raises its capital expenditures further while free cash flow continues to decline, that dividing line will shift from marginal assets to the giants. If capital expenditures stop rising and advertising revenue stabilizes, the divergence may narrow.

From last night to this morning, the money never left AI—it simply changed its pricing metric: first, the speed of revenue realization; second, the scale of capital expenditures.

The overnight reversal in Korean stocks indicates that short-term volatility stems more from positioning and oil prices than from any final assessment of AI demand.

Whether this divergence can continue depends on two sets of numbers after tonight: Meta’s capital expenditures and free cash flow, and whether oil prices can hold below $100.

Risk Disclaimer: This article is compiled from publicly available information; all data referenced are subject to official company announcements and public reports and do not constitute any investment advice.

• U.S. stock indices, sectors, and individual stocks: Exchange closing and media market summary, 10/20/2026.
• Asia-Pacific stock markets and South Korean capital flows: South Korean exchanges and South Korean media, from close on 10/20/2026 to 09:32 on 10/21 (intraday).
• SpaceX, 3M: Company Announcements, 10/20/2026.
• Commodities, USD, and U.S. Treasuries: Media Market Summary, Close as of October 20, 2026, with WTI as the front-month contract.
• Meta, Tesla: Company Earnings and Institutional Consensus Estimates, 10/20/2026.

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