AI chip stocks tumble in pre-market as SK Hynix leads 9% selloff

A broad selloff swept across AI and semiconductor stocks in US pre-market trading Monday, with SK Hynix plunging more than 9% and dragging the sector lower.

AI and semiconductor stocks plunged in US pre-market trading Monday, with SK Hynix falling more than 9% and Micron Technology dropping 6%, as a broad sector selloff erased billions in market value before the opening bell.

"The move appears to be a coordinated rotation out of high-beta semiconductor names, likely tied to escalating Middle East tensions and the surge in oil prices," said Rachel Kim, semiconductor analyst at Edgen.

AMD, Intel and ARM each fell more than 3%, while Lam Research declined 4%. Storage stocks were hit harder: Western Digital slid 6%, Seagate Technology lost 4.5% and SanDisk dropped 6.9%. The declines came as Brent crude jumped more than 4% on fears of a Strait of Hormuz closure after Iran expanded military strikes into Gulf nations, according to reports.

The selloff threatens to extend losses in the Philadelphia Semiconductor Index, which has been under pressure as investors weigh the impact of higher energy costs on chip demand and the risk of supply chain disruptions through the Middle East. The regular trading session opens at 9:30 a.m. New York time.

Oil surge compounds tech valuation pressure

Brent crude's rally above $80 a barrel reignited inflation concerns, pushing the 10-year US Treasury yield higher and tightening financial conditions for growth-dependent sectors. Semiconductor stocks, which trade at elevated price-to-earnings multiples relative to the broader market, are particularly sensitive to rising discount rates.

SK Hynix, a key supplier of high-bandwidth memory (HBM) to Nvidia, has been a bellwether for AI chip demand. Any signal of softening demand or macro-driven de-risking tends to hit the stock disproportionately. The company's American depositary receipts had gained 34% this year before Monday's pre-market decline.

What comes next

Traders will watch the regular session for signs of whether the selloff accelerates or finds a floor. The VIX, which typically rises during risk-off moves, is expected to open elevated. Key support levels for the Nasdaq 100 will be tested if the selling pressure continues through the morning.

This article is for informational purposes only and does not constitute investment advice.