South Korea's Kospi index dropped 2.7 percent, driven by a sharp decline in semiconductor stocks. The weakness spread quickly to U.S. markets, with chip bellwether Nvidia (NVDA) falling 5.0 percent to $196.51. The broader Nasdaq declined 0.2 percent, closing at 24,932, as investors pulled back from growth-oriented technology names.
The chip stock selloff signals a potential re-evaluation of the AI infrastructure spending cycle, a key driver of market gains over the past year. Investor skepticism appears to be growing about the durability of current demand levels, particularly for high-end memory and processing units critical to AI development.
The negative sentiment extended to the AI token market, where a leading AI token index fell more than eight percent. The Crypto Fear & Greed Index registered 29, indicating fear. Other major U.S. tech stocks also pulled back: Meta Platforms (META) fell 0.2 percent to $593.87 and Amazon (AMZN) dropped 0.3 percent to $231.39.
This correction is an important test for AI-driven growth narratives. Watch Nvidia's upcoming analyst day for revised guidance on data center demand or new product announcements. A sustained close below $195 could signal further downside, with the next support level around $185. A Hold rating on Nvidia reflects this cautious outlook, pending clearer signals on the next growth catalyst beyond the initial infrastructure build-out phase.
The Bank of Korea is scheduled to release its latest economic outlook report next Tuesday, which will provide insight into the country's export-driven economy and semiconductor industry. U.S. investors will also watch for July Producer Price Index data due next Friday, a key inflation gauge for tech manufacturing inputs that could influence Federal Reserve policy.
