Technology stocks extended their slide Tuesday, with the Nasdaq Composite Index dropping roughly 475 points, or nearly 2%, by mid-morning after a 1.3% decline on Monday. The sell-off has reignited long-simmering anxieties that the sustained AI-driven rally in chip stocks may finally be losing steam.
The pain was most acute in Asia, where South Korea’s Kospi index — the world's best-performing benchmark since the start of 2025 — plunged 10%, triggering a 20-minute trading halt. Major chipmakers Samsung and SK Hynix each fell 12%, leading the collapse. European semiconductor heavyweights including STMicroelectronics, Infineon, and ASML also lost ground, highlighting the breadth of the downturn.
Despite the severity of the global rout, some traders on Wall Street characterize the drop as a routine pullback rather than the long-feared bursting of the AI bubble. Analysts at a major US investment bank noted that the sell-off reflects profit-taking and shifting sentiment rather than a fundamental deterioration in demand for AI-related chips.
“The AI beneficiaries have captured the zeitgeist for months,” one market strategist said. “This looks like a sharp recalibration, not a structural breakdown.” Still, the sudden nature of the decline — with billions in market value erased in hours — underscores how quickly investor mood can shift in overheated sectors.
The counter argument holds that today's sell-off could be a precursor to deeper losses. Memory-chip stocks are notoriously cyclical, and the breakneck pace of AI infrastructure spending may slow if enterprise customers tighten budgets. If key earnings reports disappoint in the coming weeks, what looks like a bump could widen into a sustained correction, they warn.