Micron and Sandisk lead a sharp tech selloff in a 'gut-check' moment for AI stocks

By Britney Nguyen

One analyst says investors are merely taking a 'breather' from buzzy tech stocks, following sharp year-to-date gains and ahead of Micron's highly anticipated earnings report this week

Micron's stock slid 13% on Tuesday.

After South Korean technology stocks fell hard on Tuesday, U.S.-listed chip stocks also saw heavy pressure.

Shares of Sandisk (SNDK) fell more than 13% for their worst one-day performance since February, according to Dow Jones Market Data. Micron Technology (MU) slid 13% and Western Digital (WDC) shares fell more than 8%.

Marvell Technology's stock (MRVL) was off more than 9%, while Seagate Technology (STX) declined 5% and Qualcomm's stock fell (QCOM) about 8%. Chip equipment makers - including Applied Materials (AMAT), Teradyne (TER) and Lam Research (LRCX) - also saw shares fall more than 8%.

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The moves followed South Korea's tech-heavy KOSPI index KR:180721 plunging almost 10% Tuesday, led by a more than 12% drop for memory-chip makers SK Hynix (KR:000660) and Samsung Electronics (KR:005930).

The selloff sparked colorful reactions, with Daniel O'Regan, Mizuho's managing director for equity trading, titling his Tuesday note to clients: "Tech Wreck." But Wedbush analyst Daniel Ives saw the moves as more of a "breather" following strong year-to-date gains for many major players.

"We will continue to go through a number of 'gut-check moments' in the tech trade as the AI revolution remains in the third inning," Ives wrote in a Tuesday note, adding, "this morning is just another one of those moments."

He cited "some added nervousness on the important memory-chip trade" ahead of Micron's earnings that are due out after Wednesday's market close.

A third-party report recently stoked fears about memory pricing, according to Mizuho's O'Regan. He pointed to other potential drivers of the selloff as well, including an "unwind" in shares of SpaceX (SPCX) and the fact that chip stocks had doubled in less than six months.

"Fundamentals still strong, but that kind of move tends to invite pullbacks," he wrote of the chip sector in his note to clients.

Jeffrey Favuzza, a Jefferies trading-desk analyst, wrote that there have been "more questions bubbling up underneath the surface the last 2-3 weeks around the implications of China open source models + token minimizing, etc. and the tactical implications for the AI trade." He saw SpaceX-related pressures and Korean investor leverage as other potential factors behind the selloff.

He and his team "still don't believe there's [a] singular answer here," he added.

-Britney Nguyen

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06-23-26 1723ET