SK Hynix stock drops, chip sector declines as AI trade angst returns

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What happened: Chip stocks declined in premarket trading on Monday, led by shares of South Korean memory maker SK Hynix ( 000660.KS , SKHYV ).

What's behind the move: Investors took profits amid concerns of an increasingly overstretched and crowded trade. Worries over a report signaling that SK Hynix's operating profit for its current quarter may trail consensus estimates also weighed on sentiment.

SK Hynix stock sank 15% in Asia, setting the stage for a sharp decline in US traded shares after their stellar debut on Friday . Rival Samsung Electronics ( 005930.KS ) also fell in South Korea, while AI memory stocks Micron ( MU ), Sandisk ( SND K), and Western Digital ( WDC ) all sank more than 5% on Monday morning.

Chip stocks Intel ( INTC ), AMD ( AMD ), Broadcom ( AVGO ), and Arm Holdings ( ARM ) also declined roughly 2% with the broader sector.

What else you need to know: The decline marks a sharp reversal from SK Hynix's US debut, in which its American depositary shares surged 13% above the $149 offering price on Friday. The company raised $26.5 billion in the offering, making it the largest US 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 providers may need to take on more debt to fund soaring AI infrastructure spending. 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 AI inference workloads require vast amounts of memory and other components to process increasingly complex queries and power AI agents.

Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.

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