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By: Editorial Team, StoneX Media
The selloff in semiconductor stocks began in Seoul and did not stay there. SK Hynix slumped 14% after a strong Nasdaq debut in which its American depositary receipts rose almost 13%, and the decline prompted a 5% drop in the Kospi. Consequently, tech stocks in Europe came under pressure and Nasdaq futures gave back some of their recent gains, raising fresh questions over how much momentum the artificial intelligence rally has left. Notably, the move unfolded despite continued strong demand for advanced semiconductors.
Fiona Cincotta, Senior Market Analyst at StoneX, has spent more than 15 years trading and analyzing UK, European and U.S. markets, covering equities, forex and commodities with a focus on macroeconomic drivers. Her coverage spans the European tech stocks, U.S. index futures and cross-border equity themes.
What began as a strong U.S. listing turned into a cross-border reversal within one session. SK Hynix slumped 14% in Seoul trading after its American depositary receipts rose almost 13% on their Nasdaq debut, and the decline triggered a 5% drop in the Kospi. In Cincotta's assessment, "the selloff reversal appears to reflect a combination of profit taking after the recent rally and some caution ahead of earnings season". As a result, tech stocks in Europe came under pressure and Nasdaq futures also retreated, confirming that sentiment in the AI trade now travels across regions in a single day.
Taiwan Semiconductor Manufacturing fell as well, even after reporting second quarter revenue up 36% year on year, with June revenue alone jumping almost 68%, results that reinforce the view that demand for AI chips remains exceptionally strong. The concern lies further ahead. Investors are becoming "increasingly worried over this huge CapEx spending by major tech firms", Cincotta notes, specifically that cloud companies could be over investing in AI infrastructure before consumer or enterprise usage has caught up, a dynamic that could result in a sudden reduction in future orders for chipmakers. With the Philadelphia Semiconductor Index trading 80% higher year to date and 6% higher over the month, she sees "some signs of those gains starting to lose momentum", with semiconductor earnings later in the season the next potential catalyst for these stocks.
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--- Written by Gus Farrow, Senior Manager, StoneX Media
--- Expert: Fiona Cincotta, Senior Market Analyst
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