Written by: Trend Research

On Monday, the KOSPI index in South Korea plummeted by 10%, with SK Hynix and Samsung each dropping over 12%, following rumors that SK Hynix might slow down HBM4 expansion. This shock to the Korean stock market quickly spread to the U.S. stock market's chip chain, with Micron dropping 13.18% to $1,051.77, SanDisk down 13.64%, and Maywell falling 8%. The Philadelphia Semiconductor Index closed down 7.87%, while the Nasdaq Composite closed down 2.21% at 25,587.04 points.

Market Performance

The Nasdaq dipped 2.21% to 25,587.04 points, the S&P 500 fell 1.44% to 7,365.46 points, and the Dow Jones decreased slightly by 0.09% to 51,666.84 points. Chip stocks became the day’s biggest losers, with memory chips suffering greatly. Micron, SanDisk, and Western Digital dropped by 13.18%, 13.64%, and 8.5%, respectively, leading to a repricing of the entire memory chip ecosystem. Nvidia fell over 4%, AMD dropped more than 5%, Intel decreased over 6%, and the Philadelphia Semiconductor Index closed down 7.87%.

Defensive sectors were relatively resilient. IBM rose 5.04% to $264.94, Accenture increased 1.75% to $127.01, Walmart climbed 1.91% to $119.42, and Johnson & Johnson gained 3.37% to $239.075.

SpaceX increased by 0.98% to $156.11, ending a three-day streak of losses. The VIX jumped to 19.49, up 12.79% from the previous day. In commodities, WTI crude oil fell to $73.1, hitting a nearly three-month low; Brent crude oil dropped to $77.2; gold fell below $4,100. Bitcoin declined by 4.23% to $62,266, while Ethereum dropped about 5.7%. The U.S. dollar index reached a new high over the past year, with the offshore yuan falling nearly 200 points to approach 6.80.

Macro and Outlook

The key point is that this selling pressure does not indicate a drop in AI demand itself, but rather a reassessment of overly optimistic production capacity for memory chips. Rumors of SK Hynix slowing HBM4 expansion triggered a simple yet deadly logic chain: if there are signs of weaker-than-expected supply in HBM, then the certainty of the entire AI infrastructure cycle decreases.

The PCE inflation data on Thursday will determine the market's repricing of federal funds futures. CME data shows that traders are pricing in a rate hike for September, while just two weeks ago, they expected only one rate increase for the year. If the PCE data is hotter than expected, the probability of a rate hike will jump to over 50%. On the same day, Micron will release its earnings report, with Wall Street expecting Q3 revenue of about $34.5 billion. The key point will be whether the gross margin for HBM can be maintained at 81%, as well as management's guidance for HBM production capacity in 2027. Any conservative remarks will trigger a further decline.

The U.S.-Iran oil exemption policy has taken effect, with the U.S. allowing Iran to sell oil within 60 days, keeping inventory and supply expectations persistently suppressing oil prices. Geo-political risk premiums have essentially faded.

Trend Perspective

The most direct implication of this sell-off is: the AI arbitrage cycle has moved from frenzy to rational pricing. A 10% drop in the Korean stock market is not a technical correction but a sign that large institutions have begun to question whether the growth rate of AI capital expenditure is sustainable. Memory chip prices have already tripled, and whether demand can match this supply expectation has become a hard question.

Previously, Micron was valued as the ironclad guarantee of AI infrastructure, but is now being priced as a cyclical good. This shift can be ignited by a single piece of bad news. The Dow Jones fell slightly while the Nasdaq crashed over 2%, indicating that the AI sector is losing its dominance. Thursday’s earnings report from Micron and the PCE data will be a turning point. The market is not looking for current quarter data but for long-term supply certainty, which has significantly decreased since yesterday.