BlockBeats report: On Tuesday, June 24, AI-driven trading underwent its most intense stress test of the year. The Korean stock market plunged sharply, led by Samsung Electronics and SK Hynix, followed by a sell-off that spread to U.S. trading hours, with memory, storage, and semiconductor stocks bearing the brunt.
On Tuesday, South Korea’s KOSPI index briefly dropped nearly 10%, triggering a 20-minute trading halt. Samsung Electronics and SK Hynix, both central to the global AI supply chain, suffered severe declines. According to The Wall Street Journal, this downturn subsequently spread to U.S. markets, with the Nasdaq Composite closing down 2.2% and the S&P 500 down 1.4%; AI and semiconductor-related stocks led the losses, as investors began reassessing the costs of data center construction and the uncertainty surrounding future revenue realization.
Some argue that this global AI stock decline is the "Zhipu's DeepSeek moment"—a repeat of the early 2025 AI stock selloff triggered by DeepSeek’s release, where the exceptional strength of this open-source model has sown doubt in the market about U.S. AI dominance. Jefferies investment bank stated in its report that Zhipu’s GLM-5.2 has entered the top three globally among large models.
Arun Sai, Senior Multi-Asset Strategist at Pictet Asset Management, told the Financial Times that markets are currently facing two pressures simultaneously: rising skepticism about AI investment returns and higher interest rate expectations driven by U.S. economic resilience. Ben Inker, Co-Chief Asset Allocation Officer at GMO, also believes that related stocks had risen too sharply and were due for a correction.
The decline in U.S. chip stocks indicates that capital is not exiting the entire technology sector, but rather the hardware segment that previously benefited most from the AI infrastructure narrative. Eric Johnston, Chief Equity and Macro Strategist at Cantor Fitzgerald, characterizes the current trading dynamic as selling off the "biggest spenders," pointing to hyperscalers like Alphabet, Amazon, and Meta, which still plan to invest hundreds of billions of dollars in building AI data centers.
The decline in South Korea’s stock market may be more attributable to specific events. On Monday, Lee Chan-jin, President of the Financial Supervisory Service of South Korea, stated that the prior approval of leveraged single-stock ETFs linked to Samsung and SK Hynix was too hasty. The market was also hit by MSCI’s decision not to include South Korea on its developed markets watchlist, temporarily dashing investors’ expectations of passive capital inflows.
Sellers are shifting their focus to Micron’s upcoming earnings report. Dilin Wu, strategist at Pepperstone Group, told Bloomberg that Micron’s earnings this week will be a key indicator of the health of the hardware supply chain; a strong performance would directly benefit Samsung and SK Hynix. Lee Jae Mahn, strategist at Hana Securities in Seoul, noted that SK Hynix has outperformed Samsung too rapidly, pricing in overly optimistic expectations.
Another variable causing market unease is the growing reliance of AI infrastructure financing on debt. According to The Guardian, citing Ipek Ozkardeskaya, Senior Analyst at Swissquote, SpaceX’s pursuit of large-scale debt financing shortly after its IPO has reignited investor concerns that major tech companies are overinvesting in AI infrastructure and are now funding this race through debt.
However, bulls have not concluded that the AI trade is over. Dan Ives, Head of Global Technology Research at Wedbush Securities, stated in a report on Tuesday that the pullback in the Korean market may pressure U.S. tech stocks, but he still believes the AI revolution is in its early stages, making this more of a “gut check” in the tech trade. Jonathan Schiessl, Deputy Chief Investment Officer at Westminster Asset Management, also described the decline as a necessary correction after overheating, not the end of the story.
This means Tuesday’s decline was less a rejection of AI demand and more a repricing of AI-related trades. The real question has shifted from “Will AI grow?” to “Is the price paid for that growth too high?”—who can turn capital expenditures into cash flow, who has overvalued their assets, and who will be forced to sell as leverage and crowded trades unwind.