Tech stocks are plunging as global investors dump high-flying chip makers

The pain is stacking up in the chip sector.

Global tech stocks were slammed on Tuesday as investors continued to dump high-flying chip names, sending US markets tumbling after a deep sell-off in Asia.

In the US, major indexes opened deep in the red. The Nasdaq 100 fell over 3% and the S&P 500 lost nearly 2% before paring some losses.

Here’s where major indexes stood around 1:45 p.m. ET:

• Nasdaq 100: 29,533.04, down 2.68%

South Korea, a mecca in the chip industry, recorded brutal losses in its stock market during Tuesday’s session, with the KOSPI index dropping nearly 10%. It marked the index’s worst single-day decline in more than three months.

The semiconductor sector bore the brunt of the selling pressure. In Asia, Samsung Electronics closed 12.3% down, while SK Hynix ended 12.5% lower. Both companies had joined the $1 trillion club last month.

Micron, AMD, and Intel led losses in the US.

Here were the most notable moves in the sector:

SpaceX, which logged its third straight day of straight losses on Monday, was relatively flat. After a searing rally after its historic IPO, the rocket and AI company has shed almost $400 billion in market capitalization.

Investors appear to be rushing to take profits after a historic run-up in the chips sector. The iShares Semiconductor ETF is up 108% year-to-date.

After a huge run-up in semiconductors over the last month, traders are showing “increasingly tactical worry on expectations heading into earnings,” strategists at Jefferies wrote in a note.

“The former generals of the market appear to have lost momentum, and investors are rotating into other areas of the market that are more defensive, less AI focused and offer more predictable cash flows,” wrote Chris Weston, the head of research at Pepperstone, in a post on X.

“The question now is whether the US retail investor, filled with FOMO feelings, will emerge, yet again, as dip buyers,” David Rosenberg, a top economist, wrote on Tuesday.

Other top analysts said the sell-off should be a dip-buying moment, and that sporadic weakness in the hottest stocks isn’t surprising.

“Taking a step back we continue to believe that in this market we will continue to go through a number of ‘gut check moments’ in the tech trade as the AI Revolution remains in the 3rd inning…this morning is just another one of those moments,” Wedbush Securities analyst Dan Ives wrote.

South Korea has been one of the world’s hottest equity markets this year, powered by a surge in artificial-intelligence-related stocks. But that rally has left the market especially exposed to any reversal in the global AI trade.

The weakness spread across Asia during the session. Japan’s Nikkei 225 closed 3.6% lower, while Hong Kong’s Hang Seng Index fell over 2%. China benchmarks also declined. That then bled into Europe, where major indexes in Germany and France declined more than 1%, as did the pan-continental Euro Stoxx index.

Other risk assets also faltered, with bitcoin tumbling below $63,000, marking a roughly 50% decline since October.