| Is it Time to Book Profits on Your Highfliers? Stocks are rebounding today after a steep selloff yesterday led by some of the hottest names in the market, particularly in the chip and memory space. The NASDAQ fell 2.2%, led by losses in highfliers SanDisk and Micron, both of which plunged more than 13%. The selloff was global, starting in South Korea, where the red-hot KOSPI index plunged 10%. The index is still up about 100% in 2026, thanks to massive gains in memory giants SK Hynix and Samsung. The two stocks, which account for almost 50% of the index, each fell more than 12% yesterday. Earlier this week, SK Hynix became the largest company in South Korea, surpassing Samsung. It, along with Samsung and Micron, is a major supplier of high-bandwidth memory, or HBM, a critical component in AI data centers. Their stocks have posted extraordinarily strong gains lately amid concerns about a shortage of memory chips and relentless demand from AI applications. All three companies entered the $1 trillion market capitalization club this year. Some investors believe yesterday's selloff reflected profit-taking ahead of Micron's earnings results, due after the market close today. A surprisingly hawkish tone from the new Fed chair has also unnerved markets, as investors increasingly price in the possibility of rate hikes later this year. At the same time, investors are growing more skeptical of the massive spending by hyperscalers and want to see returns on those investments. So far, however, they have continued to reward the companies benefiting most directly from that spending, including chipmakers and memory stocks. Rising use of leverage in South Korea has also unsettled some investors and contributed to heightened volatility in the world's hottest stock market. South Korean retail investors have piled into high-octane products, including leveraged single-stock ETFs. What distinguishes this bull market from many others is that it is being driven primarily by earnings growth. Many of the market's top-performing companies are generating enormous profits due to blockbuster demand for their products, and their valuations do not look unreasonable. That said, we could see elevated volatility in these names going forward, as they have gone up too much too quickly. In addition, persistently high interest rates are generally not favorable for stocks. · Quality ETFs Could Be a Smart Choice for Investors Seeking Stability · AI Memory Bottleneck? These ETFs Let You Buy All the Winners · South Korea ETF (FLKR) Hits New 52-Week High
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Neena Mishra Director of ETF Research (see all the previous Zacks Fund Newsletter Editions) | 
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