Why Stocks Are Down Today: AI Chip Selloff Rocks Global Markets (July 28, 2026)
A deepening selloff in AI chipmakers is dragging down global stock markets today, with South Korea's Kospi falling 9% and tech stocks under severe pressure. Here's why markets are down and what investors should watch.
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Global stock markets are under heavy pressure on July 28, 2026, as a widening selloff in artificial intelligence chipmakers sends shockwaves from Wall Street to Asia. Mounting skepticism over the return on massive AI infrastructure spending is the central force behind today’s declines.
The AI Chip Selloff Deepens
The primary driver of today’s market decline is a sharp reversal in semiconductor stocks tied to AI. Investors are growing increasingly doubtful about whether the hundreds of billions of dollars being poured into AI data centers and chips will translate into the profits Wall Street has priced in.
South Korean chip giant SK Hynix slumped as much as 13% on Tuesday, while Samsung Electronics fell up to 10%. The two companies — widely seen as bellwethers for AI investment sentiment — dragged South Korea’s benchmark Kospi Index down by 9%, one of its worst single-day drops in years. The broader MSCI Asia Pacific equity gauge slipped 3%, while Japan’s Nikkei 225 and Taiwan’s benchmark index each fell nearly 4%.
US Markets: Chip Stocks Continue to Bleed
The pain isn’t limited to Asia. US semiconductor stocks have been under sustained selling pressure throughout July. On Monday, July 27, the VanEck Semiconductor ETF (SMH) fell more than 2%, adding to heavy losses from the prior week. AMD dropped 5% and Teradyne shed 4% to lead the declines. Micron Technology also fell around 2%.
The broader indices managed to hold up slightly better on Monday — the Dow Jones Industrial Average gained 262 points (+0.51%), and the S&P 500 closed nearly flat (+0.02%) — but the Nasdaq Composite edged down 0.18%, reflecting continued pressure on tech-heavy names. Today’s Asian session losses point to a potentially rougher open for US markets.
Geopolitical Tensions: A Secondary Headwind
The AI chip narrative isn’t the only weight on markets. The US-Iran conflict has been a recurring source of volatility throughout July. US airstrikes on Iran earlier in the month rattled investors and drove oil prices sharply higher, squeezing energy-sensitive sectors. A brief pause in fighting over the weekend offered some relief — oil prices slid more than 6% on Monday, helping retail, media, and automotive stocks recover — but geopolitical risk remains elevated and could flare up again.
SpaceX: From IPO Darling to Under Pressure
One high-profile casualty of the broader tech selloff is SpaceX (SPCX), which completed the largest IPO in history on June 12, raising $75 billion at $135 per share. The stock surged to an all-time high of $225.64 shortly after listing but has since given back more than half those gains. As of Monday, shares were trading around $109 — below the IPO price — marking eight consecutive sessions trading under the $135 offering price.
What’s Behind the AI Skepticism?
The core issue rattling chip stocks is a growing sense that AI spending expectations have outpaced fundamentals. As one market researcher put it, “Expectations are up, and fundamentals are struggling to meet these sky-high demands.” Hyperscalers and cloud providers have committed to trillion-dollar AI buildouts, but revenue and earnings from those investments have been slow to materialize — and investors are beginning to ask hard questions.
This echoes concerns that emerged earlier in 2026, when tech stocks slid sharply amid worries over AI disruption to existing business models and whether the AI capex cycle would deliver the promised returns.
Bonds Rise as Investors Seek Safety
In a classic risk-off rotation, bond markets are rallying today as equity investors move to safer assets. Treasury yields are falling as demand for government bonds picks up — a pattern typically seen when fear grips equity markets.
What Should Investors Watch?
- Earnings season: Major tech and chip company results will be critical in confirming or dispelling AI revenue concerns.
- US-Iran developments: Any escalation or de-escalation in the Middle East will directly move oil prices and risk sentiment.
- SMH and chip ETF levels: The VanEck Semiconductor ETF remains a key barometer — sustained selling here typically drags the broader Nasdaq lower.
- SpaceX trading: Whether shares can reclaim the $135 IPO price will be watched closely as a gauge of tech risk appetite.
Bottom Line
Today’s market decline is primarily a story of AI valuation reality catching up with hype. After years of semiconductor stocks pricing in near-perfect execution of the AI infrastructure boom, cracks are appearing. Combined with lingering geopolitical uncertainty from the US-Iran conflict, investors are in a risk-off mood. Until earnings provide clearer evidence that AI spending is translating into real profits, chip stocks and tech-heavy indices may continue to face headwinds.
Stay tuned to AI Magazine for ongoing market coverage and analysis.
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