South Korea's KOSPI index fell nearly eight percent, closing at its lowest point in two years. Major chipmakers Samsung Electronics and SK Hynix led declines, dragging down the broader index as investors grew increasingly concerned over chip demand and potential inventory buildups.
The selloff spread immediately to U.S. markets, with chip stocks leading declines on the Nasdaq. Nvidia (NVDA) dropped five percent to $196.51, extending its recent downward trend. The move suggests investors are pricing in a slowdown in hyperscaler capital expenditures or a shift in AI spending priorities. Current valuation multiples for many chip names do not yet fully reflect that potential deceleration.
Analysts now point to potential oversupply in certain high-volume memory chip segments, particularly after a period of robust demand. While AI infrastructure buildouts remain a long-term driver, the pace of immediate orders appears to be moderating. Rapid expansion of production capacity—particularly in advanced packaging—now risks outpacing near-term customer needs.
The Nasdaq Composite fell 0.2 percent to 24,932, weighed down by tech weakness. The S&P 500 was flat at 7,413. Investors rotated into software and cloud names: Microsoft rose 1.9 percent to $389.10 and Alphabet gained 2.1 percent to $326.56. The market is favoring companies with diversified revenue streams over hardware-centric plays in the near term.
The next catalyst is earnings reports from major U.S. chip manufacturers over the next two weeks. Investors should scrutinize commentary on order backlogs, inventory levels and revised forward guidance—particularly any adjustments to capital expenditure plans—as those details will set the sector's direction for the remainder of the year.
