South Korea’s red hot stock market continued to record sharp losses on Wednesday, with the country’s benchmark index Kospi plunging another 4% to extend losses for the third consecutive session amid continuing downtrend in tech stocks.

Kospi dropped around 4% to 7,352.89 on Wednesday morning, the lowest level seen since late May this year. The index later recovered some losses but continued to trade in the deep red. This came as heavyweight Samsung Electronics saw its share price fall nearly 4%, while peer SK Hynix gained 1%. Battery maker LG Energy Solution slid 4%.

The sharp selloff was triggered in the previous session after Samsung shares crashed nearly 10% on Tuesday, even after the world's largest memory chipmaker forecast a 19-fold surge in its second quarter operating profit. The sharp drop in Samsung’s share price may have been driven by concerns about the durability of the AI-driven chip boom.

Some analysts attributed the sharp crash in Samsung's share price to higher market expectations triggered by record memory chip prices. "Samsung's strong earnings were widely expected and had largely been priced in after its shares rallied ahead of the results," Reuters quoted Albert Yong, a managing partner at Petra Capital Management.

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"Investors remain concerned about the sustainability of the AI boom and the risk of slower AI infrastructure spending by major U.S. technology firms,” Yong added. Notably, memory chip prices have seen sharp surges during the quarter as AI spending expanded beyond high-bandwidth memory (HBM) into conventional DRAM and NAND products.

FIIs turn net sellers in South Korea

Wednesday’s crash also comes amid heavy selling by foreign investors after gains this year so far. Foreign investors were net sellers of shares worth 471.7 billion won ($311.68 million) in South Korea’s stock market.

US stock market also crashed yesterday, with the tech-heavy Nasdaq falling more than 1% as volatility heightened in chipmaker stocks on AI worries and growing concern over risky investment products. Intel, Micron and AMD shares crashed up to 10%. The Philadelphia Semiconductor Index also lost nearly 5% as investors questioned whether AI-related spending could be sustained.

Kospi still world's best-performing stock market index

Despite the sharp selloff in South Korea’s stock market, Kospi continues to hold its position as the world's best-performing major stock index in 2026, having advanced 74% so far this year, driven largely by the surge in AI-linked semiconductor stocks.

Goldman Sachs continues to remain bullish on South Korea's stock market, saying that the earnings momentum is increasingly improving across other sectors. "Incremental foreign inflows have already begun rotating toward other AI-related beneficiaries and industrials, and we expect this trend to continue as investors seek exposure to the broader AI supply chain and opportunities that are uncorrelated with AI," the analysts said in a note on Sunday, as quoted by Business Insider.

Also Read | S&P 500, Nasdaq end lower as AI worries hit chipmakers