What’s happened: Chip stocks fell in premarket trading Monday, led by shares of South Korean memory maker SK Hynix (000660.KS, SKHYV).
What’s behind the move: Investors took profits amid concerns about increasingly congested and crowded trading. Sentiment was also weighed down by concerns over a report that SK Hynix’s current-quarter operating profit could lag consensus estimates.
Shares of SK Hynix fell 15% in Asia, setting the stage for the U.S.-traded stock to fall sharply after its stellar debut on Friday. Rival Samsung Electronics (005930.KS) also fell in South Korea, while AI memory stocks Micron (MU), Sandisk (SNDK) and Western Digital (WDC) fell more than 5% on Monday morning.
Shares of chip makers Intel (INTC), AMD (AMD), Broadcom (AVGO) and Arm Holdings (ARM) also fell about 2%, along with the broader sector.
What else you need to know: The decline marks a sharp reversal from SK Hynix’s U.S. debut, when its American depositary shares rose 13% above its $149 offering price on Friday. The company raised $26.5 billion in the offering, making it the largest U.S. IPO ever by a foreign company.
Chip stocks have been volatile in recent months, with the sector peaking in late June amid concerns that hyperscale cloud computing providers may have to take on more debt to finance rising costs of artificial intelligence infrastructure. Any signs of a slowdown in AI investment could trigger a broader sell-off in memory stocks.
Semiconductor stocks have been a key driver of earnings growth this year, helping lift the broader stock market as artificial intelligence workloads require huge amounts of memory and other components to handle increasingly complex queries and run artificial intelligence agents.
Ines Ferre is a senior business reporter for Yahoo Finance covering the U.S. stock market, publicly traded companies and commodities.
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