Seoul: South Korean stocks closed sharply lower Thursday on continued concerns over the profitability of the artificial intelligence (AI) sector. The Korean won rose against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) fell 61.9 points, or 1.53 percent, to 3,994.5.

According to Yonhap News Agency, trade volume was moderate at 576 million shares worth 12.8 trillion won (US$8.7 billion). Losers outnumbered winners 685 to 195. Institutions were net sellers, offloading 100.6 billion won, while retail investors purchased a net 423.2 billion won. Foreign investors were net sellers for a fourth consecutive session, releasing a net 355.9 billion won.

"Issues surrounding Oracle's data center projects have fanned concerns over the profitability of AI, but the KOSPI's decline was limited due to Micron's earnings surprise," Lee Kyoung-min, an analyst from Daishin Securities, said. Overnight, Oracle slipped by more than 5 percent after reports said its major funding partner decided to drop out from the company's data center construction project.

It remains uncertain whether Micron's earning surprise could calm fears of an AI bubble, but could strengthen confidence in the "semiconductor super cycle," which will likely provide momentum to the country's major chipmakers, Lee added. In Seoul, most large-cap shares closed lower.

Market bellwether Samsung Electronics dipped 0.28 percent to 107,600 won, while its chipmaking rival SK hynix inched up 0.18 percent to 552,000 won. Battery Maker LG Energy Solution tumbled 8.9 percent to 378,500 won on the cancellation of a 9.6 trillion-won supply deal with Ford Motor. Top carmaker Hyundai Motor dipped 1.22 percent to 282,500 won and defense giant Hanwha Aerospace retreated 2.18 percent to 851,000 won. Portal operator Naver slipped 0.22 percent to 230,500 won.

The local currency was quoted at 1,478.3 won against the greenback as of 3:30 p.m., up 1.5 won from the previous session's close.