Memory chip stocks tumble 15% as Broadcom guidance sparks AI rout

A selloff in memory semiconductor stocks swept across Hong Kong and Seoul markets after Broadcom's weaker-than-expected AI chip guidance triggered a broad unwinding of crowded AI trades.

"The market is repricing AI expectations from 'unlimited growth' to 'very strong but decelerating growth,'" said Rachel Kim, semiconductor supply chain analyst at Edgen. "Memory stocks, which had the most to gain from the AI buildout, are now bearing the brunt of the correction."

The CSOP two-times leveraged ETF tracking SK Hynix dropped more than 15% in Hong Kong trading, while the equivalent Samsung Electronics ETF fell over 12%. On the mainland China-linked side, Montage Technology and GigaDevice each declined nearly 6%. The selloff followed a 5.45% plunge in the Philadelphia Semiconductor Index after Broadcom forecast AI chip revenue of $16 billion for the third fiscal quarter of 2026, below the $17.2 billion consensus. The company's full-year guidance of $56 billion also fell short of the $57.6 billion estimate.

The rout underscores the fragility of AI-linked semiconductor valuations after a year-long rally. South Korea's KOSPI, where Samsung and SK Hynix account for a significant weighting, triggered a circuit breaker after falling more than 6%. Foreign investors have net sold approximately $22 billion in South Korean stocks since May, with SK Hynix alone seeing about $12 billion in net outflows, according to exchange data.

Memory Makers Face the Sharpest Correction

For memory chipmakers, the stakes are particularly high. SK Hynix and Samsung Electronics have been the primary beneficiaries of surging demand for high-bandwidth memory (HBM), a type of DRAM stacked vertically to deliver faster data transfer in Nvidia's AI accelerators. HBM has become one of the tightest supply points in the AI supply chain, with SK Hynix effectively sold out through 2025.

The KOSPI had more than doubled in market capitalization over the past year, driven largely by semiconductor stocks. The current selloff represents a concentrated liquidation of what had become one of the most crowded trades in Asian equities, according to South Korea's finance minister, who expressed concern about leveraged investments and herd mentality in financial markets.

What This Means for Investors

For investors, the key question is whether this marks a buying opportunity or the start of a deeper correction. SK Hynix and Samsung Electronics shares had priced in years of AI-driven demand growth. If Broadcom's guidance signals that hyperscaler capital expenditure is nearing a plateau rather than accelerating, memory chipmakers could face a prolonged de-rating. The Philadelphia Semiconductor Index's 5.45% decline suggests the repricing is global, not limited to Asia.

Broadcom, a key supplier of custom AI chips to hyperscale cloud providers including Google and Meta, saw its shares tumble more than 15% in after-hours trading after its guidance disappointed investors who had priced in uninterrupted acceleration. The company's results serve as a bellwether for the broader AI chip ecosystem, given its exposure to the three largest cloud computing platforms.

This article is for informational purposes only and does not constitute investment advice.