Author: qinbafrank
Having endured an anxious weekend, how should we view the market this week? Last Friday evening, there was a detailed analysis of several changing factors in the U.S. stock market's performance in the latter half of last week, with the earliest risk alert coming from a space-related hint on Wednesday night. (Related reading: U.S. Stock Pullback Warning: What Are the Real Risks in AI? A Look at New Capital Flows in Software Stocks, Optical Interconnects, SpaceX, and Bitcoin)
The Core Logic of This Correction:
AI/semiconductors saw excessive short-term gains, market FOMO was too strong, trading structures were overly crowded—parabolic rises themselves are unsustainable. This was then met with a massive SpaceX IPO roadshow and subscription cash drain, natural risk aversion ahead of CPI/PPI/FOMC, and strong employment data reinforcing concerns about "higher rates for longer or even renewed hikes," ultimately triggering concentrated deleveraging in popular tech stocks. Of course, this is also revisiting old themes; the key is how to view the subsequent developments.
1. First, a review of several adjustments over the past six months or so
There was a similar tech stock plunge last December. It was triggered by Oracle raising concerns about AI ROI and capital expenditure, followed by another sell-off after Broadcom's earnings, until Micron's strong earnings and relatively mild inflation data pulled sentiment back. The common point between the two episodes is interest rate expectation disturbances; the difference is: late last year/early this year, the market was more worried about the numerator side—AI capex returns. This time, a consensus that "the AI logic has broken" hasn't formed yet; the market is more concerned about the denominator side—interest rates, inflation, the Fed, geopolitics, and liquidity.
The memory sector is one of the strongest themes in this round of AI trading, with the largest gains, highest visibility, and strongest earnings leverage, making it the most likely target for concentrated profit-taking when crowded trades unwind. Taking Micron as an example, this round fell from the June 3 high of 1089.29 to Friday's close of 864.01, a closing decline of about 20.7%; if calculated based on the intraday low of 850.18, the maximum decline was about 22.0%. This already exceeds the roughly 20% decline in mid-May but hasn't reached the more extreme panic levels seen during the March war period.
KORU, as a 3x leveraged ETF for the Korean market, can roughly indicate risk appetite for Korean tech/memory trading but shouldn't be directly equated with the Korean index itself. KORU fell from its June 1 high of 1279.70 to its June 5 close of 610.01, a decline of about 52.3%; based on the intraday low of 599, the decline was about 53.2%.
In terms of magnitude, this round has already surpassed the mid-May correction;
In terms of duration, this round has seen four consecutive days of adjustment, also approaching the past short-term main decline windows.
Therefore, a relatively reasonable judgment is: Against the backdrop where the AI fundamentals have not been disproven, the short-term main decline wave may have completed a significant portion, and the probability of consecutive sharp declines going forward has diminished.
So this week may not necessarily see continued plunges, but the probability of a direct V-shaped recovery is not high; it's more likely to be range-bound consolidation or a slow, low-volume decline. However, as long as U.S. Treasury yields don't retreat and CPI/FOMC haven't landed, the market will likely remain highly volatile, leaning defensive, waiting for confirmation and improvement in timing.
2. Next, look at several major events from the weekend to today
1) There are still frictions between Israel and Lebanon, with Iranian missiles and drones beginning to strike Israel. Trump is simultaneously pressuring Netanyahu not to retaliate while continuing to safeguard the U.S.-Iran agreement line. This line will disturb oil prices and also remind the market of inflationary pressures.
However, there are no signs yet of re-escalation to full-scale失控.
Looking at Trump's interview last night, he is极力 ensuring the U.S.-Iran war does not escalate.
2) Nvidia and SK are expected to announce a cooperation plan on Monday. Jensen Huang's tone was direct: shortages in memory, wafers, advanced packaging, silicon photonics, and these bottlenecks could last for years. This statement ties back several previously炒作 themes.
In the current market state, this will provide some support to the market but is unlikely to immediately lead to a reversal. Today, observe the market盘面: after opening lower, can core stocks stabilize? Will companies with orders, customers, and strong industry positions be the first to be bought back by funds?
If core companies stabilize while speculative stocks remain chaotic, that's divergence.
If core companies can't hold support either, the sustainability of such rebounds will be poor.
3. Wait for the macro to give the first signal
The big rally over the past two months since early April saw its大涨契机 first from the macro ceasefire in the Iran situation, then from the compute shortage, followed by accelerated AI commercialization. These three themes unfolded sequentially from early to mid-April, driving a major wave.
April was: "Macro risks解除 → AI industry logic重新被放大";
Now is: "AI industry logic isn't broken → but macro denominator side is suppressing valuations → so from a personal perspective, also need to wait for macro止血 first".
Therefore, to achieve a true reversal now, it will likely first require a "止血 signal" from the macro层面. It doesn't necessarily have to be a macro positive as significant as the "Iran ceasefire" in early April; more realistically, the market needs to see the denominator side stop deteriorating further.
Why does the macro need to give a signal first this time?
Because the main矛盾 of this decline is not "the AI logic has broken," but rather interest rates, inflation, the依稀会议, geopolitics, the巨无霸IPO cash drain, and excessive market狂热拥挤度 collectively冲击 valuations, leading to deleveraging.
In other words, the market is not asking: "Is there still demand for AI?"
It is asking:
"If interest rates continue to rise, can AI stocks still支撑 such high valuations?"
So this time, the priority for a reversal is not to look at the industry story first, but to see if the macro pressure has stopped rising.
The sequence will likely be similar: First, the macro层面 must止血—at the very least, CPI cannot be explosive, U.S. Treasury yields cannot continue to surge, SpaceX's IPO aftermath needs to release some资金 liquidity, and the FOMC cannot further放鹰. Only after the denominator pressure eases will the market return to the AI分子端,重新交易 the compute shortage, memory price hikes, AI capex, and commercialization acceleration.
For a reversal now, first watch for macro signals; but it doesn't require a full macro turnaround, just that the macro stops worsening. Once the macro止血, the AI industry logic will quickly reconnect. This is also what was discussed last Friday night—it's difficult to completely reverse in the short term, requiring patience to wait.
