Author: Tide Research
On Monday, South Korea's KOSPI index plunged 10%, with SK Hynix and Samsung dropping more than 12%, triggered by rumors that SK Hynix might slow down HBM4 capacity expansion. This shock from the Korean stock market instantly spread to the U.S. chip supply chain, with Micron tumbling 13.18% to $1,051.77, SanDisk down 13.64%, Marvell falling 8%. The Philadelphia Semiconductor Index closed down 7.87%, and the Nasdaq ended with a 2.21% decline at 25,587.04 points.
Market Performance
The Nasdaq fell 2.21% to 25,587.04 points, the S&P 500 declined 1.44% to 7,365.46 points, and the Dow Jones Industrial Average edged down 0.09% to 51,666.84 points. Chip stocks were the biggest drag on the day, with memory chips particularly hard-hit. Micron, SanDisk, and Western Digital fell 13.18%, 13.64%, and 8.5% respectively, leading to a repricing of the entire memory chip ecosystem. Nvidia dropped over 4%, AMD fell more than 5%, Intel slid over 6%, and the Philadelphia Semiconductor Index closed down 7.87%.
Defensive sectors showed relative resilience. IBM rose 5.04% to $264.94, Accenture gained 1.75% to $127.01, Walmart advanced 1.91% to $119.42, and Johnson & Johnson increased 3.37% to $239.075.
SpaceX closed up 0.98% at $156.11, ending its three-day losing streak. The VIX index 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 dropped to $77.2; gold fell below $4,100. Bitcoin declined 4.23% to $62,266, and Ethereum fell about 5.7%. The U.S. dollar index hit a new high in over a year, while offshore Chinese yuan fell nearly 200 pips intraday, approaching 6.80.
Macro & Outlook
The key point is that this selling pressure is not directed at AI demand itself, but rather a reassessment of over-optimism regarding memory chip capacity. Rumors of SK Hynix slowing HBM4 expansion triggered a simple yet deadly logic chain: if signs of weaker-than-expected HBM supply emerge, the certainty of the entire AI infrastructure cycle diminishes.
Thursday's PCE inflation data will determine the market's repricing of federal funds futures. CME data shows traders are pricing in a rate hike for September, whereas just two weeks ago, only one rate hike was expected within the year. If the PCE data comes in hot, the probability of a hike could jump directly above 50%. On the same day, Micron will report earnings. Wall Street expects Q3 revenue around $34.5 billion, with the key focus being whether HBM gross margins can hold at 81% and management's guidance for 2027 HBM capacity. Any conservative commentary could trigger a second wave of declines.
The U.S.-Iran oil sanction waiver policy takes effect, with the U.S. approving Iran to sell oil within 60 days, continuing to pressure oil prices with inventory and supply expectations. Geopolitical premiums have largely faded.
Tide Research Perspective
The most direct target of this hit is: the AI arbitrage cycle is moving from frenzy to rational pricing. The 10% drop in Korean stocks is not a technical correction, but large institutions beginning to question the sustainability of AI capital expenditure (capex) growth. Memory chip prices have already tripled, and whether demand can match this supply expectation has now become a hard question.
Micron was previously priced as the ironclad guarantee for AI infrastructure, but now it's being priced as a cyclical commodity. This shift only takes one piece of bad news to ignite. The Dow's slight decline versus the Nasdaq's more than 2% plunge indicates a divergence, meaning the AI sector is losing its dominance. Thursday's Micron earnings and PCE data are a watershed. The market is not focused on current quarter data, but on long-term supply certainty. From yesterday onward, this certainty has significantly diminished.
