US memory stocks melt down after South Korean bellwethers plummet
Tuesday was the first session South Korean traders could react to the US and Israeli strikes against Iran and the threat of a prolonged disruption to energy markets.
Memory stocks, the hottest pocket of the US stock market in recent months, are getting crushed, with Micron, Sandisk, Western Digital, and Seagate Technology Holdings all off at least 4.5% in premarket trading.
As of 6:35 a.m. ET, Micron and Sandisk have traded more dollar volume than any US stock outside of Nvidia, a signal of the highly motivated selling of these high-flying stocks.
The steep losses are linked to an ugly reopening for South Korean markets, home to high-bandwidth memory giants SK Hynix and Samsung, which tumbled 11.5% and 9.9%, respectively, in local markets on Tuesday.
South Korean markets were closed for a holiday on Monday, so this marked the first time traders were able to react to the US and Israeli strikes against Iran, which brings with it the threat of a prolonged disruption to energy markets. Such an outcome would be particularly challenging to South Korea, a major energy importer.
Foreign investors are leading the rout, pulling roughly $3.7 billion from KOSPI stocks on net, per Bloomberg. Retail traders in the East Asian country (dubbed “ants”) who have an affinity for leveraged products are reportedly buying the dip in a similar size.
The response to this negative catalyst is falling the hardest on SK Hynix and Samsung, whose humungous gains in 2026 pushed them to account for roughly 40% of the benchmark gauge. There may be some industry-specific chatter accentuating the losses, but at its core, this is just a parabolic trend breaking in the face of unexpected negative news.
As the fourth of famed Wall Street investment strategist Bob Farrell’s “10 rules for investing” dictates: “Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.”
Memory stocks had been the investing world’s favorite way to play the AI trade in recent months, as the outlook for a prolonged supply/demand imbalance sent prices of their offerings soaring. This dynamic prompted furious upward revisions to earnings and sales estimates for the cohort, which trade at modest valuations relative to most of the tech universe.
