Analysis
SK Hynix just reported the best quarter in its history -- operating profit of roughly 60.5 trillion won, about $42 billion, nearly six times what it earned a year ago on the back of AI memory-chip demand -- and its stock still fell 9.6% on the day. The miss was narrow: analysts had modeled closer to 64 trillion won. But in a market that has spent 2026 pricing AI infrastructure names for perfection, narrowly missing a record is being treated the same as a genuine disappointment.
The stock reaction is the latest leg of a selloff that started building weeks ago. SK Hynix has now lost roughly 45% of its value in about a month, wiping out more than $500 billion in market capitalization from that single company. This week alone, more than $1 trillion has been erased across the world's most valuable chip stocks -- Nvidia, SK Hynix, Samsung, Micron, AMD and TSMC all down more than $100 billion apiece. South Korea's Kospi index, heavily weighted toward chipmakers, has fallen about 40% from its June peak.
There's a domestic wrinkle amplifying the move: South Korean lawmakers are linking part of the rout to the country's May rollout of leveraged single-stock ETF products, which let retail investors take amplified bets on names like SK Hynix -- and are now amplifying the losses on the way down. The country's economy minister has publicly apologized to retail investors caught in the swings, an unusual admission from a sitting official about a market-structure decision gone wrong.
“SK Hynix has now lost roughly 45% of its value in about a month, wiping out more than $500 billion in market capitalization from that single company.”
The underlying question is whether AI infrastructure capex is peaking faster than the market expected. Memory-chip demand from hyperscalers has been the single biggest driver of SK Hynix and Samsung's results all year, and both companies' stocks are now being punished not for slowing growth but for merely growing at a rate that fails to keep re-accelerating. That's a valuation problem more than a fundamentals problem -- but valuation problems are exactly what trigger the kind of cascading selloff underway this week.
The timing compounds the pressure: this selloff lands hours before Microsoft and Meta report second-quarter earnings, with Apple and Amazon following Thursday. All four are being watched for the same signal SK Hynix just failed to deliver -- not whether AI spending is growing, but whether it's growing fast enough to justify current multiples. A soft capex outlook from any of the four could deepen the chip rout further; a confident one could stabilize it.
What to watch: whether Wednesday and Thursday's Big Tech earnings calm or worsen the selloff, whether South Korean regulators move to unwind or restrict the leveraged ETF products blamed for amplifying retail losses, and whether Micron's upcoming results become the next flashpoint for the same record-beat-but-still-sells-off dynamic.
