South Korea's 10% plunge ignites global AI tech rout, Nasdaq loses $1 trillion
A 10% plunge in South Korea's KOSPI on June 23 ignited a worldwide rout in AI-related stocks. The Nasdaq shed almost $1 trillion in value, and the Philadelphia semiconductor index fell 8%, stoking concerns that the artificial intelligence investment boom may be a bubble.
The selloff begins in Seoul
South Korea’s benchmark KOSPI index, the world’s best performer since early 2025, plunged 10% on Tuesday, its steepest single-day drop in years. The selloff was led by chip giants Samsung Electronics and SK Hynix, which had been among the biggest beneficiaries of the AI-driven demand for memory chips. The rout reflected growing unease that the rally fueled by artificial intelligence had run too far, too fast.
Wall Street catches the contagion
The selloff quickly spread to US markets, where the Philadelphia semiconductor index fell 7.9% and the Nasdaq Composite lost 2.2%, shedding nearly $1 trillion in value. Micron Technology, a top AI memory-chip play, tumbled 13%, while Nvidia dropped 4.1% to push its market cap below $5 trillion. Memory-chip makers SanDisk and Western Digital lost 14% and 8.5% respectively.
The trade has been highly concentrated and flow-driven, which makes it vulnerable to relatively small shifts in sentiment. It doesn't appear to be closely tied to the fundamentals of the AI story, but rather to the heavy concentration and strong inflows into global tech over the past few months now starting to unwind.
- SanDisk
- 14 % decline
- Micron Technology
- 13 % decline
- Marvell
- 9.4 % decline
- Western Digital
- 8.5 % decline
- Qualcomm
- 8 % decline
- Nvidia
- 4.1 % decline
Rebound and rotation
On Wednesday, Asian markets swung violently. South Korea’s KOSPI rebounded, gaining nearly 3% by late afternoon after a morning surge of 4% and a brief 2% drop. Samsung jumped 8% while SK Hynix added 1%. In contrast, Taiwan’s benchmark index fell more than 2% as Taiwan Semiconductor Manufacturing Co. slid 4%, reflecting ongoing nervousness in the sector.
- South Korea's KOSPI index plunges 10%
- Nasdaq falls 2.2%; Philadelphia semiconductor index drops 7.9%
- KOSPI rebounds nearly 3%; Taiwan benchmark falls over 2%
Political stakes for the White House
The selloff threatens to undercut a pillar of President Trump’s economic narrative. Wall Street banks estimate the largest AI companies will spend over $700 billion on capital projects this year, and the Federal Reserve Bank of St. Louis says AI contributed nearly a full percentage point to real growth in the first three quarters of 2025. A sustained downturn in tech stocks could erode household wealth concentrated among high-income investors and dampen consumer spending.
If something were to dent the confidence of that top 10 percent, that would have a ripple effect into the real economy.
We have more factories being built — and I mean car factories, AI factories, factories of every type — than we've ever had in the history of our country.
