Memory chip stocks tumble globally on AI spending fears

A wave of selling swept through memory chip and semiconductor stocks on Thursday as investors grew cautious about artificial intelligence capital expenditure and lofty valuations, triggering sharp declines from Seoul to Wall Street's premarket session.

Asian Markets Lead the Rout

South Korea's Kospi fell more than 4% on Thursday, with SK Hynix ↘ 2.17% plunging nearly 10% and Samsung Electronics dropping 6%, according to Reuters. In Tokyo, Kioxia fell 8.2% and Tokyo Electron slumped more than 5%. The MSCI Asia Pacific Index declined about 1% as broader tech sentiment soured.businesstimes

The pullback followed a weaker session on Wall Street Wednesday, where the Nasdaq Composite snapped a multi-day winning streak. Advanced Micro Devices ↘ 7.04% slipped after its quarterly results, which beat analyst estimates but fell short of elevated investor expectations. SpaceX's earnings also disappointed, as investors worried about how long its profitable Starlink business could bankroll costly data center investments.businesstimes

Western Digital Guidance Disappoints

Western Digital ↘ 5.36% fell more than 16% in U.S. premarket trading after reporting fourth-fiscal-quarter results on Wednesday evening. The company posted adjusted earnings per share of $3.56, topping the consensus estimate of $3.31, and revenue of $3.75 billion slightly beat expectations. However, its forward guidance for revenue and margins came in only marginally above estimates, failing to satisfy elevated hopes tied to the AI storage trade.tradingkey+1

SanDisk ↘ 5.40% fell more than 10%, Seagate Technology ↘ 0.91% dropped over 5%, and Micron Technology ↗ 0.06% declined more than 4% in premarket trading.tradingkey

Broader AI Trade Fractures

U.S. futures were mixed Thursday morning, with S&P 500 contracts slightly higher while Nasdaq 100 futures fell roughly 0.6%, according to Bloomberg. AppLovin ↘ 0.45% also tumbled after its second-quarter revenue of $1.92 billion missed Wall Street estimates and its third-quarter guidance came in below expectations.bloomberg+1

Nvidia ↗ 3.43% edged higher in premarket trading after Elon Musk expressed support for the company's Vera Rubin architecture during SpaceX's earnings call, but gains were limited against the broader chip selloff. Investors now await U.S. initial jobless claims and productivity data due Thursday morning, along with Friday's nonfarm payrolls report, for signals on the Federal Reserve's next move.tradingkey+1