Arm shares slide as KOSPI crashes nearly 9% in deepening chip rout

Arm Holdings ↘ 0.77% shares fell sharply on Monday as a brutal semiconductor sell-off swept global markets, with South Korea's Kospi index plunging nearly 9% in its steepest single-day decline in months. The drop adds to weeks of turbulent trading for high-valuation AI stocks, with Arm — one of the best-performing chip names of 2026 — caught in a broader rotation that has punished the sector since late June.tradingeconomics+1

A Global Chip Rout Hits Home

The selling pressure on Monday was led by Asian markets, where Samsung Electronics and SK Hynix dragged the Kospi below 7,000 for the first time in months. The index has now fallen more than 20% from a record close reached in late June, according to Reuters. Leveraged ETFs tied to Korean chipmakers sank to record lows as investor panic spread across semiconductor names globally.kedglobal+1

In the U.S., the damage extended across the chip sector. Arm entered Monday's session having closed at $323.39 on July 10, already well off its all-time high above $450 reached in June. The stock had rallied more than 200% from the start of 2026, fueled by excitement over its new AGI CPU and surging demand for AI-capable processors. That meteoric run made it a prime candidate for profit-taking as institutional investors executed what analysts have described as a tactical rotation out of leveraged tech and thematic AI funds.247wallst+5

CEO's Bullish Tone Meets Market Skepticism

The sell-off comes against the backdrop of recent comments from Arm CEO Rene Haas, who told Key Context in an interview published July 2 that "CPU demand is off the charts," driven by agentic AI workloads that require dramatically higher core counts per chip. Haas outlined a vision in which Arm's per-core royalty model would benefit from a "compounding effect" as chips scale from 128 to potentially 512 cores.taekim.substack

At the Computex trade show in Taipei in early June, Haas also confirmed ByteDance and Oracle ↗ 1.81% as customers for the new AGI CPU and said Arm had doubled its demand guidance for the chip to $2 billion across fiscal 2027 and 2028, according to Reuters. Arm posted record fiscal 2026 revenue of $4.92 billion, up 23% year over year.reuters+1

Valuation Concerns Linger

Yet the bullish demand narrative has collided with valuation anxiety. Arm's trailing price-to-earnings ratio stood at roughly 431 times before the latest decline, dwarfing the semiconductor industry average. The average analyst price target of approximately $296 sits well below recent trading levels, and firms including Wells Fargo ↗ 1.19%, Barclays ↘ 0.72%, and Bank of America ↗ 0.36% have set targets ranging from $335 to $410 — all below the stock's June peak.stockanalysis+1

The broader pattern of AI-stock volatility has persisted for weeks. CNN reported that Microsoft ↗ 3.02% and Meta ↗ 3.28% entered bear market territory in late June after losing a fifth of their value from recent highs. Investors are increasingly scrutinizing whether the massive capital expenditures flowing into AI infrastructure will deliver near-term returns, a question that has driven repeated waves of selling since early June.youtube+2