Nasdaq Enters Correction as Global AI Chip Sell-Off Intensifies

The Nasdaq-100 index entered technical correction territory on July 28 and 29, 2026, after sliding more than 10% from its record high. The downturn was triggered by a global sell-off in semiconductor and memory stocks, including Nvidia, AMD, Intel, and Micron, as investors questioned the long-term profitability and sustainability of massive artificial intelligence infrastructure spending. Market volatility intensified following reports from Alphabet Inc. of negative free cash flow resulting from heavy AI capital expenditures.

South Korean markets experienced severe declines, with the Kospi shedding over 10% of its total market capitalization in a single session. This forced officials to halt trading for the third time in several weeks, while shares of Samsung Electronics and SK Hynix dropped over 13%. In the U.S., the tech-heavy index continued its decline, falling nearly 2% at the market open on Tuesday.

Investor anxiety was further compounded by the rise of Chinese competition. The Shanghai IPO of chipmaker ChangXin Memory Technologies saw a 466% jump on its debut, raising $8.6 billion. Reports that Chinese firms are mass-producing immersion deep ultraviolet lithography machines have fueled fears that U.S. companies face a shrinking market due to existing trading restrictions. While memory firms like Sandisk and Western Digital saw steep declines, the FTSE 100 closed 0.8% higher due to its lack of specialist AI constituents. Investors are now awaiting earnings reports from Microsoft, Meta, and Amazon to determine if AI spending guidance will further pressure valuations.