Tom Lee calls chip rout a buying opportunity after 10% KOSPI crash

Tom Lee calls the chip-stock selloff a textbook buying opportunity after South Korea's KOSPI crashed 9.99% and the Nasdaq 100 dropped more than 1,000 points in a single session.

The KOSPI index plunged 9.99% to 8,203.84 on June 23, triggering circuit breakers twice in a single day, after a report that SK Hynix was slowing its most advanced AI memory production rattled investors already nervous about stretched valuations in semiconductor stocks. The selloff cascaded to Wall Street, where the Nasdaq 100 fell more than 3% and the Philadelphia Semiconductor Index dropped nearly 8%, with all 30 constituents closing lower.

"This is a textbook buying opportunity," Tom Lee, co-founder and head of research at Fundstrat Global Advisors, said in a note to clients. "The forced deleveraging in leveraged products has created an overshoot that will reverse once the positioning clears."

The damage was concentrated in the companies most tied to the AI buildout. Samsung Electronics and SK Hynix, which together account for roughly 48% of the KOSPI's market value, each fell more than 12% on June 23. In the U.S., Micron Technology dropped 13% ahead of its fiscal third-quarter results, while Sandisk declined a similar margin. Qualcomm, Intel, Advanced Micro Devices and Nvidia fell between 4% and 8%, according to exchange data.

The selloff was amplified by forced deleveraging in exchange-traded products. The Csop SK Hynix Daily 2x Leverage ETF in Korea fell 23.8% after regulators publicly cautioned that the rally in leveraged chip ETFs had gotten overheated. In the U.S., the Direxion Daily Semiconductor Bull 3x Shares ETF, which aims to deliver three times the daily return of the Philadelphia Semiconductor Index, faced heavy rebalancing pressure as the underlying index fell.

Why Leverage Made the Selloff Worse

Products like the SOXL use derivatives to deliver leveraged daily returns, but they must rebalance positions constantly to maintain their target ratio. When the market falls, these funds are forced to sell into weakness, pushing prices lower and triggering further selling from similar products. Strategists at Oppenheimer described the dynamic in a research note, saying the semiconductor rally had been "fueled by far more than even the most exuberant AI bulls" — a positioning warning rather than a valuation call.

The cross-border feedback loop added to the pressure. SK Hynix and Samsung are memory-chip peers to Micron, and the steep declines in Seoul sent a signal about the global chip cycle. Ben Emons, chief investment officer and founder of Fed Watch Advisors, said the Korean linkage meant Micron's results could impact Samsung and SK Hynix further, as the company provides insight into the industry's growth prospects.

Micron Results as the Next Test

Micron Technology reports fiscal third-quarter results after the close on June 24, and the stakes are unusually high. The company has roughly quadrupled year to date on AI infrastructure spending, with data centers buying high-bandwidth memory chips to support GPU clusters. Wall Street expects the results to confirm the memory boom is still running hot, but any cautious language on forward guidance could reinforce the concerns that triggered the selloff.

The broader market showed a telling divergence. The S&P 500 lost 1.4% on June 23, while the Dow Jones Industrial Average, which has lower exposure to high-growth technology names, ended near the flat line. That split suggests investors were reducing exposure most aggressively in companies directly linked to chips, memory and AI infrastructure, while rotating into less rate-sensitive sectors.

For investors weighing Tom Lee's call, the key question is whether the selloff reflects a genuine shift in AI demand or a structural unwind of crowded positioning. If the latter, the bounce could be faster and sharper than the drop implied. The answer may come as soon as Micron's earnings call, where management's commentary on high-bandwidth memory demand and data center orders heading into the second half of 2026 will determine whether the AI spending cycle remains intact.

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