Feeling the AI hangover

It feels like we were just writing about the volatile gains of the Kospi, South Korea’s stock market, which has climbed 90% in 2026. But just last night, the Kospi plunged 10% for its biggest one-day drop since March. Memory-chip behemoths Samsung and SK Hynix, which together make up more than half of the index’s market value, led the decline, with both falling more than 12%.

Two concerns seem to have driven the selloff. First, regulators signaled that the year’s rally may have gotten ahead of itself, with South Korea’s Financial Supervisory Service admitting it had been “too hasty” in approving some of the investment tools that helped fuel the boom, such as leveraged ETFs. Second, Counterpoint Research warned that while the memory-chip market could surpass $1.3 trillion by mid-2027, a surge in supply could eventually lead to price corrections.

From Seoul to Silicon Valley

The selloff spread to New York this morning, where several major tech names dragged the Nasdaq and S&P 500 lower:

• Micron, Western Digital, and Sandisk dropped 13.18%, 8.45%, and 13.64%, respectively, as Samsung and SK Hynix’s decline weighed on sentiment across the memory-chip industry.
• Alphabet inched 0.8% lower after yesterday’s plunge, when its worst day of trading in a year wiped out roughly $225 billion in market value following the departures of two prominent AI researchers (to rivals OpenAI and Anthropic).
• SpaceX briefly traded below its IPO price earlier today, continuing the momentum brought on by yesterday’s selloff amid a $20 billion bond offering. The drop wiped out around $400 billion from the stock’s market cap, and ranks as the second-largest one-day loss ever recorded by a US company. Shares rebounded and managed to eke out a 0.98% gain today.

Problems ahead

Investors may not be getting much relief anytime soon. Bank of America now expects as many as three rate hikes this year after previously forecasting no changes, while Deutsche Bank sees two additional quarter-point increases in September and December, thanks to strong job data and stubborn inflation.

Higher borrowing costs threaten to add yet another layer of uncertainty for many of the stocks caught up in today’s selloff, particularly for companies tapping debt markets, like SpaceX. And with concerns emerging about future chip supply, the market is showing less patience for stocks that are priced to perfection.—SY