Odaily Planet Daily reports, according to CICC Research, starting in mid-to-late June, global AI chains experienced noticeable corrections, with South Korea—characterized by high leverage, high congestion, and high retail participation—seeing the most severe declines. This was driven by amplifying factors such as high congestion and leverage, macroeconomic disturbances (including rising expectations of Fed rate hikes and renewed blockades in the Strait of Hormuz pushing up oil prices), and renewed market concerns about a potential bubble as AI reaches this stage (e.g., Meta leasing out computing power and declining token expenditures).
In fact, before the dot-com bubble finally burst in March 2000, the tech rally experienced at least four significant and prolonged pullbacks. The triggers for these declines were highly similar to the current correction: short-term setbacks in industry trends, macroeconomic headwinds, and overheated valuation sentiment. Ultimately, tech stocks were able to rebound again because these three pressures eased. Therefore, for the current market to stabilize and potentially launch a new upward cycle, similar conditions must align: the digestion of high overcrowding and high leverage (largely achieved), a reduction or resolution of Fed rate hike expectations (watch the July FOMC), and, most importantly, new catalysts from earnings reports and industry developments (the July–August earnings season). (Jin10)