US investors have a tendency to be myopic. And who can blame them? They trade in the biggest market. All the biggest companies are American.
That focus has been reaffirmed in recent months, with the AI trade driving US indexes to repeated record highs. Not to mention the biggest IPO in history just took place stateside.
But beyond the Magnificent 7 — outside the US entirely — gains have been minted that put US returns to shame.
Forget SpaceX. Foreign investors have been all about South Korean chip stocks. Samsung and SK Hynix have stormed the global market-cap rankings, breaking the $1 trillion valuation mark and continuing higher. At their recent peaks, they were up 196% and 354% year to date, respectively.
But the problem with gains that rapid was laid bare on Tuesday, when Korean chipmakers tanked double-digit percentages, setting off a chain reaction of selling across the world.
The Korean Kospi index — which had more than doubled in 2026 — started off the session inheriting some late-day jitters from the US around rate hikes and AI spending. That was then compounded by a local report that SK Hynix is slowing production for its top-end memory chips. A circuit-breaker stoppage and matching 13% losses from Samsung and SK Hynix later, the Kospi closed 10% lower.
In the US, the tech-heavy Nasdaq 100 shed 3.3%, while the Philadelphia Semiconductor Index tanked 7.9%. There was nowhere to hide for tech investors.
The ordeal shined a light on just how vulnerable the AI trade can be if even one major — albeit relatively overlooked — player has issues.
SK Hynix got some attention when it broke through $1 trillion a few weeks ago, but it's hardly been viewed as having the ability to tank the whole market. If this is the case with the second-biggest Korean chipmaker, what happens if a Magnificent 7 giant has similar issues?
It's the question that's likely to keep AI investors up at night for the foreseeable future.
But there are some key differences between the US and Korean markets that may put investors' minds at ease. As Tuesday showed, the US won't be completely immune to Korean influence, but it should be able to avoid a full-fledged contagion event.
A primary pain point for the Korean market was the forced unwinding of retail-investor positions trading with borrowed money. There was also deep selling of leveraged ETFs tracking Samsung and SK Hynix. Both situations show what can happen in a market driven to an outsized degree by risk-hungry retail traders.
But on a given day in Korea, 50% to 70% of trading can be driven by retail. That's much more than the 20% to 25% normally seen in the US, lessening the overall market-moving impact.
The next big event for US chipmakers will come this week in the form of Micron earnings, due after the closing bell today. Traders are going to be especially sensitive to chip-demand guidance, and signs of how spending is holding up. Investors appear to already be pricing in disappointment, with Micron shares down 13% on Tuesday.
No pressure, Micron, but the near-term fate of the AI trade rests in your hands. Let's see what you've got.
