NEW YORK (Realist English). The Nasdaq 100 on July 28 entered a technical correction for the first time since June, falling more than 10% from its record high at the start of the month.
The tech benchmark, which as recently as a week ago seemed invincible, lost more than 10% over 38 trading days — twice as fast as during the previous correction in March 2026.
The epicentre of the collapse is semiconductor stocks, which were the main beneficiaries of the AI rally in the first half of the year — and are now its main victims.
SanDisk Loses 50% in a Month, SK Hynix — 14.7% in a Day
The chip sell-off has turned into a rout. US memory maker SanDisk, which was one of the market’s top favourites at the start of the month, plunged more than 14% on July 28, bringing its July decline to 50%. Western Digital and Micron lost about 9%, AMD about 7%.
In Asia, the situation was even more dramatic. South Korea’s KOSPI index crashed by 10.8% — the largest drop since the start of the US‑Iran war in March. SK Hynix, a key memory chip supplier to Nvidia, plunged 14.7%, while Samsung Electronics fell 13.4% — its worst one‑day drop in nearly two decades. Japanese flash memory maker Kioxia tumbled 18%.
As StoneX senior analyst Matt Simpson noted: “It looks like we’ve reached that stage of the sell‑off where tech investors are rushing for the exits simply because Nasdaq says so. Asian markets are setting the tone, and it looks ugly.”
Chinese Breakthrough: DUV Lithography Threatens ASML’s Monopoly
The main trigger for the plunge was news of China’s progress in semiconductor manufacturing. On July 27, The Information reported that a Chinese state‑backed company had launched mass production of immersion deep ultraviolet (DUV) lithography equipment — a technology that had long been a monopoly of Dutch ASML.
The Chinese manufacturer plans to produce about five such systems in 2026 and around 20 in 2027. This directly threatens ASML’s dominance in the critical chip‑making equipment market. ASML shares fell 3.4% on July 28, and more than 11% in pre‑market trading on July 27.
At the same time, Chinese chipmaker CXMT held a record IPO in Shanghai, with its shares surging nearly 500% on the first day of trading. This raised concerns that Chinese memory makers could accelerate capacity expansion, crashing global chip prices.
Nvidia and “Circular Financing”: $750 Billion in Debt Obligations
A separate blow to the market came from news of Nvidia’s $750 billion AI infrastructure deals. Investors were alarmed by the growing debt burden in the sector and the emergence of so‑called “circular” deals — where AI investments create an increasingly complex web of interdependencies between equipment manufacturers and AI startups.
The cost of insuring Nvidia’s debt against default rose at a record pace on July 28. As Pepperstone Group strategist Dillin Wu noted: “This is a signal that the credit market is noticing what the stock market hasn’t fully priced in yet.”
Alphabet and Tesla: The First Signs of AI Disappointment
The chip sell‑off was a direct continuation of investor disappointment with tech giants’ earnings last week. Alphabet shares plunged more than 7% after the company raised its 2026 capital expenditure forecast to $195–205 billion , while its free cash flow turned negative for the first time since its IPO in 2004.
Tesla lost 13–14% after Elon Musk called 2026 a “massive year of capital expenditure.” Total capital spending by the four largest tech companies — Alphabet, Microsoft, Amazon, and Meta — in 2026 is projected at about $724 billion, and in 2027 it will approach **$950 billion.
As Leverage Shares senior analyst Violeta Todorova said: “When one trade becomes so crowded, investors don’t wait for bad news — they just need an excuse to take profits. After an extraordinary rally, expectations became nearly flawless. When valuations leave no room for disappointment, even small shifts in sentiment can trigger deep corrections.”
On July 29, investors await earnings from Microsoft and Meta, and on July 30 — from Amazon and Apple. According to Reuters, these reports will determine whether the sell‑off continues or the market finds a bottom.
Barclays warns: “Concerns about financing uncertainty, rising capital expenditure, and Big Tech’s free cash flow have come to the forefront.”
For now, the Nasdaq 100 is in correction territory for the first time since March 2026. The MSCI World Semiconductor Index fell more than 15% in July, its worst performance since 2022. And the main question troubling the market remains unanswered: when will the trillions of dollars poured into artificial intelligence start generating real returns?
