AI Stocks Slide as Ives ETF Drops 10% and iShares Semiconductor ETF Falls 15%

Q: Why did SK Hynix stock plunge in Korea right after its record-breaking US debut?

SK Hynix fell in Seoul mainly because investors used the Nasdaq debut as a chance to rotate and sell the Korea-listed shares, while a broader semiconductor selloff was already hitting the market. The ADR launch was a huge capital event. SK Hynix issued 17.79 million new shares for the US listing, raising about $26.5 billion. That created dilution concerns and encouraged arbitrage: investors could buy the new US ADRs and sell the Korean stock, especially after the ADRs jumped 13% on debut. Market commentary around the listing also pointed to this trade, which added pressure to the Seoul shares. The drop was amplified by weak sector sentiment. Korean chip stocks had already been under pressure after Broadcom’s disappointing AI-chip revenue outlook triggered a pullback across the AI semiconductor complex. SK Hynix, as a major HBM supplier tied closely to the AI trade, was especially exposed to that shift in sentiment. Foreign selling in Korea also mattered. Overseas investors were dumping Kospi shares, with roughly $801 million sold by Monday morning. Analysts at Nomura and Goldman Sachs said some of that was “forced selling” tied to benchmark rebalancing and portfolio limits after Korea’s rally, rather than a sudden deterioration in SK Hynix’s business. So the plunge was less a verdict against the US debut itself than the result of dilution and arbitrage from the ADR sale, combined with a broader AI-chip correction and heavy foreign outflows from the Korean market.

3 articles · Updated · The Motley Fool · Jul 13

As of the July 13 close, the Dan Ives Wedbush AI Revolution ETF was down 10% since June 1 and the iShares Semiconductor ETF had fallen 15% from its June 22 peak.
Investor caution has risen as Iran turmoil, U.S. inflation worries and doubts about whether massive AI spending will generate enough returns have weighed on the sector.
Nearly $700 billion in AI infrastructure investment is planned this year, even as companies are still in the early phase of training models and building capacity for surging workloads.
The pullback follows a huge run-up— the Ives ETF is still up nearly 50% since launch and the semiconductor fund has gained more than 200% over three years— underscoring the tension between short-term risk and long-term AI growth.