While foreign investors have put the brakes on the KOSPI rally, their bets on artificial intelligence (AI) themed stocks have actually increased.

According to the Korea Exchange on August 12, foreign investors sold 284.5 billion won worth of shares during the week through August 8. This marks a pause in the 'Buy Korea' rally by foreign investors, which had continued for three consecutive months since May. This shift is attributed to disappointment over tax reform, which has strengthened the tendency for profit-taking by sector and by individual stocks.

However, even amid this pause, foreign investors have increased their bets on AI-themed stocks. The top five stocks most heavily bought by foreigners this month (totaling a net purchase of 716.7 billion won) are LG CNS, Kakao, Korea Electric Power Corporation (KEPCO), Doosan Enerbility, and Samsung Electro-Mechanics. All of these companies have attracted market attention due to positive developments related to AI. This stands in contrast to last month, when the top five net buys by foreigners were spread across a variety of sectors, including semiconductors (Samsung Electronics), shipbuilding (Hanwha Ocean), and biotech (Alteogen).

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LG CNS, which topped the list of net purchases by foreigners this month, drew attention by becoming the first Korean company to win a contract for building an overseas AI data center. The data center, scheduled for completion in Jakarta, Indonesia by the end of 2026, is expected to become the largest local facility of its kind (worth about 100 billion won). LG CNS was also part of the consortium led by the LG Management Development Institute's AI Research Center, which secured the 'National AI Champion' development project. Recently, the company has been in the spotlight for another reason, after it was revealed to be among the stocks traded by independent lawmaker Lee Chunseok, who is under suspicion for trading stocks under borrowed names.

Kakao, which posted a surprise result in the second quarter, saw the second largest foreign buying after LG CNS, despite being excluded from the 'National AI Champion' list. Although its content division recorded negative growth for five consecutive quarters, the upcoming KakaoTalk overhaul and joint services with OpenAI, set to launch next month, have sparked rosy outlooks from securities analysts. Kim Dongwoo, a researcher at Kyobo Securities, said, "By 2026, when this overhaul is fully implemented, ad revenue from Talk Biz is expected to grow 14% year-on-year," raising his target price from 68,500 won to 76,000 won.

Korea Electric Power Corporation and Doosan Enerbility, both part of 'Team Korea' that won a 26 trillion won nuclear power plant project in the Czech Republic, are also key players in the AI rally. As the expansion of 'power-hungry' AI data centers drives a surge in electricity demand, nuclear power stocks are gaining prominence. Doosan Enerbility, in particular, rose over 4% on the day after President Lee Jaemyung emphasized nuclear cooperation with Vietnam. Choi Kyuhun, a senior researcher at Shinhan Investment Corp., said, "Doosan Enerbility is collaborating with several small modular reactor (SMR) design companies, including NuScale Power, X-energy, and TerraPower," estimating the company's SMR-related orders this year at 500 billion won.

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Samsung Electro-Mechanics, long regarded as a perennial 'supporting player' in the semiconductor market, has also attracted foreign interest since the second quarter, as it began supplying substrates for AI accelerators to major U.S. tech giants such as Amazon and AMD. Yang Seungsu, a researcher at Meritz Securities, said, "As the supply-demand imbalance for flip-chip ball grid array (FC-BGA) substrates for AI deepens, the benefits for a handful of companies, including Samsung Electro-Mechanics, will become even greater." He also noted that the company's 12-month forward price-to-book ratio (PBR) stands at 1.37 times, below its historical average of 1.6 times, suggesting further upside potential for the stock.