South Korea's stock market surged 18% on Friday, achieving its largest single-day gain on record and reclaiming the 6,500-point level.

The rally was driven by robust performance in the semiconductor sector and better-than-expected quarterly results from Microsoft overnight, which alleviated concerns over heavy spending on artificial intelligence (AI). The Korean won also strengthened sharply against the U.S. dollar.

The Korea Composite Stock Price Index (KOSPI) climbed 1,001.89 points, or 17.91%, to close at 6,595.45. This came after three consecutive days of steep declines triggered by sell-offs in chipmakers and other AI-related stocks. Friday's gain surpassed the previous record of 11.95% set on October 30, 2008, marking the biggest single-day percentage increase in the index's history.

Over the prior three trading sessions, the KOSPI had fallen more than 17% amid worries about massive spending on AI infrastructure. However, investor sentiment improved after Microsoft reported second-quarter results that exceeded expectations, with both sales and cloud growth beating market forecasts.