The South Korean stock market can only be described as "extremely volatile" right now.

The country's benchmark index, the KOSPI, surged 15% on Friday afternoon, after earlier in the session hitting an intraday gain of up to 17%. This record-breaking rally comes after a turbulent week of sharp price swings, during which the exchange triggered circuit breakers on Tuesday and Wednesday to allow for a cooling-off period amid steep losses.

Before Friday's rebound, the KOSPI had been in a sustained decline. Growing concerns have emerged that the planned investment of over $1 trillion in artificial intelligence infrastructure over the next two years risks overexpansion. Samsung Electronics and SK Hynix are the leaders in memory chips, the primary beneficiaries of this investment boom, and would be the first to suffer if major tech companies cut back on AI infrastructure spending.

For investors looking for a catalyst, Friday's KOSPI rally was sparked by statements from Microsoft and Amazon, which indicated they plan to increase spending on AI computing power despite already massive investments. Additionally, new regulatory measures from the South Korean government aimed at stabilizing market volatility took effect on Friday, boosting confidence. The KOSPI had fallen about 25% over the past month, and investors are hoping for a turnaround.

Even with the recent pullback, the KOSPI remains one of the best-performing stock indexes globally this year, with gains of nearly 50%.

Gao Kun, head of Asia research at Australia and New Zealand Banking Group, said, "The KOSPI's movements are reminiscent of a speculative stock or cryptocurrency. Such extreme behavior is abnormal for a major index."

The KOSPI's current position above 6,400 points is driven by intense volatility from Samsung Electronics and SK Hynix. These two companies are the world's top memory chip manufacturers, and memory chips are the core hardware for developing AI technology.

In Seoul trading on Friday, Samsung Electronics shares surged 21%, while SK Hynix gained 24%. Despite both companies reporting record quarterly revenue and profits, their shares have fallen sharply over the past month.

Gao Kun analyzed that the previous sell-off in the KOSPI was partly due to retail investors who had heavily borrowed to buy these two stocks. As prices began to decline, these investors were forced to liquidate their positions, exacerbating the market's downturn.

Gao Kun added that with speculative investors exiting, foreign capital and other funds are returning to the South Korean market, seeing it as an opportunity to buy high-quality assets at lower prices.