The stock market is often described as a voting machine in the short term and a weighing machine in the long term. However, there are moments when the votes come flooding in just as the weight of the company begins to increase, creating a powerful synergy that investors simply cannot ignore. We are currently witnessing such a phenomenon with Licom (388790), a company that has recently found itself at the exciting intersection of two of the most potent themes in the current global market: Artificial Intelligence (AI) infrastructure and the Defense industry. As an observer of market trends, it is fascinating to dissect the recent movements of Licom, not merely as a ticker symbol flashing red on a screen, but as a case study in how corporate restructuring and strategic pivots can reignite investor sentiment.
Let us begin by addressing the elephant in the room: the recent price action. On February 9, 2026, Licom’s stock price surged dramatically, recording an increase of over 12% to 13%, pushing the price into the 2,800 KRW range. This movement was violent enough to trigger a Volatility Interruption (VI), a mechanism designed to cool down overheated trading. For the casual observer, such a spike might look like a speculative frenzy. However, a deeper look reveals that this is not entirely baseless speculation. The catalyst appears to be a fundamental shift in the company's financial health. The announcement of the 2025 results revealed sales of approximately 176.8 billion KRW, a staggering 34.64% increase year-over-year, and more importantly, a successful transition to profitability—a 'black ink turnaround.' In the world of small and mid-cap stocks, few phrases carry as much weight as 'turnaround.' It signals that a company has moved past its survival phase and is now entering a growth trajectory.
From a technical analysis perspective, the current setup for Licom offers a rich narrative for traders and investors alike. The Relative Strength Index (RSI) over a 14-day period currently stands at 61.74. For those unfamiliar with this indicator, the RSI measures the speed and change of price movements. An RSI below 30 typically indicates a stock is oversold, while above 70 suggests it is overbought. A reading of 61.74 is particularly intriguing because it sits in what many technicians call the 'bullish momentum zone.' It indicates that buying pressure is strong and dominant, yet the stock has not yet reached the hysterical 'overbought' territory that often precedes a crash. The stock has room to run, theoretically, before it becomes technically exhausted. The recent price change of 14.66% confirms this momentum. We are seeing a breakout backed by volume and news, which is the classic recipe for a sustained trend rather than a one-day wonder.
However, it would be irresponsible to paint a purely rosy picture without looking at the cautionary signals. The AI Analysis Score provided for Licom stands at 40. This is a sobering number. While the momentum is strong (RSI) and the recent news is positive (turnaround), a score of 40 generally suggests that the overall investment attractiveness—when factoring in long-term stability, valuation multiples, and historical risk—is below average or 'neutral-negative.' This discrepancy between the hot price action/RSI and the cool AI score is the crux of the investment dilemma. It suggests that while the short-termtrade is highly attractive due to news flow and momentum, thelong-term structural safety of the investment still needs to be proven. Investors are essentially betting that the 2025 turnaround is not a fluke but the start of a new normal.
To understand why the market is willing to bet on Licom despite the low stability score, we must look at the industry tailwinds. Licom operates in the optical amplifier and transceiver market. Historically, this might have sounded like a niche component business. Today, however, it is the backbone of the AI Data Center revolution. As AI models grow exponentially in size, the bottleneck is no longer just the GPU computing power, but the speed at which data moves between chips and servers. Optical communication is the highway for this data. Licom’s strategic emphasis on AI infrastructure places it directly in the supply chain of the world's most aggressive capital expenditure cycle. When investors see 'AI Data Center' and 'Turnaround' in the same report, the valuation multiples they are willing to pay expand significantly.
Furthermore, the Defense (K-Defense) angle provides a unique hedge. The geopolitical climate globally has led to increased defense spending, and modern warfare is increasingly electronic and data-driven. Licom’s expansion into defense-related components diversifies its revenue stream. While the tech sector can be cyclical and prone to sentiment shifts regarding interest rates, the defense sector tends to be more resilient, driven by government contracts and long-term strategic needs. This dual-engine growth model—explosive potential from AI and steady demand from Defense—is likely what fueled the 34% sales growth seen in the 2025 report.
Analyzing the recent trading behavior, specifically the week leading up to February 9, reveals a tug-of-war in market participants. While the stock price has netted a gain of over 4.8% in the past week, we observed net selling by foreign investors to the tune of over 36,000 shares. This is a classic divergence. Foreign investors, often algorithmic or strictly valuation-based, may be taking profits on the sharp rise or adhering to strict risk models reflected in the low AI score. On the other hand, retail investors and domestic institutions appear to be focusing on the 'Turnaround' narrative and the sector momentum. The fact that the price surged despite foreign selling indicates that the domestic buying pressure—likely fueled by the VI-triggering excitement and the earnings surprise—is currently overwhelming the selling pressure.
Investors should also pay close attention to the peer group performance. KOSDAQ-listed tech firms like Saltware and Bixolon have also shown double-digit gains recently. This confirms that Licom’s rise is not an isolated event but part of a broader sector rotation where capital is flowing into hardware and infrastructure plays that can demonstrate tangible results. In a market environment where speculative 'concept stocks' are being punished, companies like Licom that show actual sales growth (+34.64%) and profit generation are being rewarded with a premium.
So, how should an intelligent investor approach Licom at this juncture? The key lies in risk management and timeline. For short-term traders, the RSI of 61.74 and the recent VI trigger suggest that volatility will remain high. The stock is 'in play.' Buying on dips while the RSI remains above 50 could be a viable strategy to ride the momentum. The 'Turnaround' news acts as a floor, preventing the stock from easily falling back to its pre-earnings lows, as the fundamental value of the company has arguably increased.
However, for long-term investors, the Analysis Score of 40 should serve as a check on enthusiasm. One year of profitability does not a blue-chip make. The challenge for Licom will be to prove that its defense and AI revenue streams are recurring and sustainable, not one-off project-based wins. The recent volatility, where the stock fluctuated from -5% to +13% in a matter of days, requires a stomach of steel. Chasing the stock immediately after a 13% spike is often dangerous. A prudent approach would be to wait for the volatility to settle and see if the price can consolidate above the 2,600-2,700 KRW level, turning previous resistance into support.
In conclusion, Licom represents a classic high-risk, high-reward turnaround play. It has successfully pivoted its business to align with the two most robust themes of our time: AI and Defense. The numbers—a 34% sales jump and a return to profitability—validate this strategy. The technicals show a stock that has woken up from its slumber and is running with vigor. Yet, the underlying stability metrics warn us that this is still a developing story. The market has voted with its wallet, pushing the price up, but the weighing machine is still calibrating. For investors, Licom is a stock that demands attention, but it also demands discipline. It is a shining example of how KOSDAQ small-caps can reinvent themselves, but as with all reinventions, the true test will be in the consistency of the performance in the quarters to come.