A global selloff in artificial-intelligence stocks deepened Tuesday, hammering chip makers from Seoul to New York as investors questioned whether the AI boom can sustain its lofty valuations — even as strong bank earnings lifted the Dow.
South Korea bore the brunt. The benchmark Kospi dropped more than 7% in morning trading, falling below 6,000 for the first time since late July, before closing 5.5% lower. The Korea Exchange briefly halted program trading to curb the volatility, its first such intervention in two months. Samsung Electronics and SK Hynix, the world’s two largest memory-chip makers, fell between 7% and 10% on the day. Japan’s Nikkei 225 dropped 1.8%, and in Europe, chip-equipment giant ASML fell 3.2%.
Two triggers
Two developments drove the rout. Chinese chip maker CXMT said it had achieved a major breakthrough in memory technology — a new chip structure with about 30% smaller cell area, with a product expected by the end of 2026 — raising fears that Chinese rivals could erode the pricing power of Samsung and SK Hynix. And Broadcom chief executive Hock Tan warned at a conference in Singapore on Monday that many AI investors were flying blind: “A lot of investors have no clue what they are investing in… it’s almost like they are in a casino.” Tan also cautioned that financing the enormous AI buildout will become a key problem.
U.S. markets split
In the United States, the pain was concentrated in chip stocks. Nasdaq futures fell about 0.7%, with Micron and SanDisk down 4% to 5% in premarket trading and Nvidia off 1%. Money instead rotated into big technology names such as Meta and Microsoft, which gained. The broader market held up: the Dow climbed 0.5% after JPMorgan Chase and Goldman Sachs reported results that beat expectations, while the S&P 500 edged 0.1% higher.
Oil and bonds offered some relief. Brent crude fell about 1.2% to around $104.50 a barrel, and West Texas Intermediate dropped 1.6% to $92.20. The 10-year Treasury yield eased to about 5.18% after the bond market’s Monday holiday closure, with the 30-year yield near 5.55%. Gold rose above $4,200 an ounce, and bitcoin traded near $83,100.
What it means for households
For ordinary savers and investors, the split market matters more than the headlines. Chip-stock losses can dent retirement accounts and funds heavy on technology shares. But the fall in Treasury yields could bring a touch of relief to mortgage and other borrowing costs, and cheaper crude oil takes some pressure off gasoline prices, which have been running above $4 a gallon.
Sources: Wall Street Journal; Morningstar/Dow Jones; Investor’s Business Daily; Investopedia.
