South Korea's tech-heavy KOSPI index plunged roughly 10% on Tuesday, triggering circuit breakers and raising fresh concerns that one of the market's hottest trades may finally be running out of steam.
The selloff came after an extraordinary run. Before Tuesday's decline, the KOSPI had surged roughly 90% this year, fueled largely by enthusiasm for artificial intelligence and the companies supplying the chips that power the AI revolution. It also came less than a day after a symbolic milestone: SK Hynix, Inc. (HXSCL) overtook Samsung Electronics Co., Ltd. (SSNLF) as South Korea's most valuable listed company.
For some investors, that was a sign the AI trade had become overheated. Wedbush analyst Dan Ives sees it very differently.
Why SK Hynix Passing Samsung Matters
The significance of SK Hynix surpassing Samsung goes far beyond market capitalization.
For decades, Samsung has been the dominant force in South Korean technology. But the rise of generative AI has reshaped the semiconductor landscape, placing an enormous premium on high-bandwidth memory, or HBM, the specialized chips used alongside Nvidia Corp (NVDA) AI accelerators.
SK Hynix has emerged as one of the biggest beneficiaries of that trend.
The company's rise reflects a broader shift across the semiconductor industry: investors are increasingly recognizing that AI isn't just driving demand for GPUs. It's also creating unprecedented demand for the memory needed to feed those processors.
Dan Ives' 'Golden Jewels' Of The AI Revolution
In a note to clients, Ives described SK Hynix, Micron Technology Inc. (MU) and Samsung as the "golden jewels" of the AI revolution. The reason comes down to supply and demand.
High-bandwidth memory has become one of the most important components inside AI servers, and supply remains tight as cloud providers and AI companies race to secure capacity. That scarcity has transformed memory manufacturers from commodity chip producers into strategic beneficiaries of the AI infrastructure buildout.
According to Ives, investors worried about Tuesday's selloff are missing the bigger picture: strong demand and limited supply continue to support the industry's long-term outlook.
Why Micron Earnings Matter So Much
The timing of the selloff is particularly notable because Micron is scheduled to report earnings on Wednesday. The results could become the next major test of the AI memory trade.
Investors will be closely watching management's commentary on HBM demand, pricing trends and future supply constraints. Any indication that demand remains robust could reinforce Ives' view that the recent weakness is more about market positioning than deteriorating fundamentals.
A Pullback Or A Warning Sign?
Ives views the KOSPI's decline as a breather following a market that had nearly doubled this year rather than evidence that AI demand is fading. Recent industry checks across Asia continue to show strong enterprise spending and no meaningful cracks in the broader AI investment cycle, according to the note.
That is why Ives remains bullish on the companies sitting at the center of the memory-chip supply chain.
Companies producing memory chips remain crucial to powering the AI boom, and one of them just surpassed Samsung. The demand story, analysts say, is just getting started.
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