Persistent AI Sell-off Weighs on Domestic Indicators Amid CoreWeave and Semiconductor Weakness
KOSPI Plummets 14.5% Last Week as Volatility Surges on French Fiscal Concerns
Key Market Trends
① Ongoing AI Weakness: CoreWeave Plunges Again
U.S. equities faced technology-led downward pressure as AI-related shares, spearheaded by CoreWeave, suffered steep renewed losses.
Market sentiment was further dampened by projections that Anthropic’s implied valuation could be marked down from its previous $2 trillion target to around $1.5 trillion.
Additional pressure stemmed from reports that a New York public pension fund called for a halt to Anthropic’s IPO, citing AI safety and governance concerns.
Speculation regarding potential position liquidations by major hedge funds drove deeper sell-offs in related tickers, including Volue, Nebius, CoreWeave, and Micron.
Nevertheless, Wall Street continues to assess that the recent correction in AI stocks is excessive relative to actual fundamental changes.
② Semiconductor Sector Extends Losing Streak to 8 Days; Capital Rotates to Defensive Plays
The Philadelphia Semiconductor Index dropped for the eighth consecutive session, reflecting a severe contraction in short-term investor sentiment.
Historically, the longest recorded losing streaks for the index stand at nine sessions, occurring only twice—in 1996 and 2006.
Capital exiting AI and semiconductor plays has rotated into defensive sectors such as energy, utilities, and consumer staples.
Recent reports indicate that hedge funds are actively increasing their allocations to defensive assets.
While rising crude oil prices acted as a market headwind, a decline in U.S. Treasury yields—driven by safe-haven demand—provided a positive offset.
Market observers also noted that capital is rotating across sectors rather than triggering a broad-based collapse of the U.S. stock market.
③ French Fiscal Anxieties Emerge; Yield and Dollar Movements in Focus
Beyond AI and semiconductors, fiscal and political instability in France has emerged as a fresh market variable.
French sovereign bond yields recently climbed to their highest levels in two decades, heightening apprehension over European fiscal stability.
The yield spread between 10-year French and German government bonds widened to levels not seen since the European sovereign debt crisis, reflecting elevated market risk premiums.
If the situation in France spills over into broader European bond market weakness and a depreciating euro, it could fuel U.S. dollar strength and global yield volatility.
Investors will closely monitor how French-origin anxieties impact U.S. Treasury yields and the dollar index this week.
Market Perspective
AI-related market noise has persisted on a nearly daily basis for close to two weeks. A continuous barrage of negative headlines—ranging from CoreWeave’s debt concerns and Chinese memory chips to Anthropic’s valuation and hedge fund rumors—has prevented investor sentiment from staging a meaningful recovery.
Supply-and-demand dynamics remain fragile. With recent share buyback volumes on the decline, market participants are looking to upcoming conference calls from Samsung Electronics and SK hynix to see whether share buybacks will resume. Compounding these dynamics, French fiscal instability has emerged as a new variable impacting yields and the greenback.
Conversely, the recent magnitude of the sell-off appears significantly overdone relative to actual shifts in economic and corporate fundamentals. The KOSPI tumbled 14.5% last week, marking its sharpest weekly decline since October 2008. Over the past decades, instances of the index falling more than 20% within an eight-session span have occurred on only six prior occasions.
In the near term, the market requires a stabilization phase to absorb AI-related headwinds and supply imbalances. Simultaneously, it is an opportune moment to take note of the historic depth of the recent correction. While remaining mindful of volatility, investors should evaluate sectors that experienced sharp pullbacks following recent rallies alongside the trajectory of traditional market leaders.
Today's Checkpoints
AI: Potential expansion of CoreWeave and Anthropic-related concerns
Semiconductors: Potential technical rebound following the Philadelphia Semiconductor Index's eight-day losing streak
Supply & Demand: Foreign capital flows in large-cap stocks including Samsung Electronics and SK hynix
France: Spillover effects of fiscal and political instability into European fixed income and the U.S. dollar
Market Depth: Oversold bounce attempts following last week’s -14.5% plunge
Source: Market Analyst’s Stock Story (t.me/shmstory)
YouTube: Market Analyst TV www.youtube.com/@blueoak1004
This article has been reorganized from a Telegram post by "Market Analyst's Stock Story" with the author's consent. All content is subject to potential errors and does not constitute a recommendation to buy or sell securities; thus, it cannot be used as the basis for trading decisions. Under no circumstances may the contents of this publication be used as legal evidence.
