Top Asian stocks in the memory industry retreated sharply today, July 2, as profit-taking gained steam. In Japan, Kioxia stock retreated to ¥75,160, down by 33% from its highest point this year. It has jumped by 555% this year.
The same trend happened in South Korea, where SK Hynix gapped downwards, reaching a low of 2,333,000 KRW, its lowest level since June 17. It has also dropped by 22% from the year-to-date high.
Samsung, another top player in the memory industry, also plunged, reaching a low of KRW 292,500, down by 22% from its highest point this year. The three companies have erased billions of dollars in value.
Kioxia, SK Hynix, and Samsung stocks dropped amid profit-taking
One key reason behind the ongoing retreat in the Kioxia, SK Hynix, and Samsung stocks is that investors have started booking profits following their recent gains. Samsung stock has jumped by 350%, while SK Hynix has soared by over 730% in the last 12 months. It is common for stocks and other assets to pull back after experiencing such substantial gains.
The stocks also retreated as American memory and semiconductor stocks dropped. The closely-watched PHLX Semiconductor Index turned lower and ended the day at 13,353, down by 8.87% from last month’s highest point. The Roundhill Memory ETF (DRAM) dropped to $65.85, down by 19% from the year-to-date high.
Most US memory and semiconductor companies retreated, with Micron falling by 17% from the July high. This retreat happened even after the company published a blemish-free report, which showed that its revenue jumped by over 300% in the last quarter.
Meta Platforms to launch cloud computing business
In addition to profit-taking, there are three key reasons why memory stocks are sinking. For example, these companies were sued at the US District Court for the Northern District of California for inflating DRAM prices.
The lawsuits alleged that these companies are limiting the distribution of these products and hurting their businesses. It is still too early to know how the case will go, but it may be a sign that customers are starting to push back.
Memory stocks also retreated after Bloomberg reported that Meta Platforms was considering launching a cloud computing business to sell its excess computing capacity to other companies.
The report raised concerns that additional compute supply could slow the pace of data center expansion, dampening demand for AI infrastructure and memory chips.
At the same time, there is the ongoing rotation from memory companies to other firms. For example, there is rotation from semiconductor and memory companies towards technology companies like Microsoft, Meta Platforms, Google, and Amazon. Microsoft stock jumped to $384, up by 10% from its lowest level this year.
Meta Platforms stock soared to $630, much higher than the June low of $540, while Amazon jumped to $240. These sector rotations are common in the stock market.
Still, the ongoing Kioxia, SK Hynix, and Samsung stocks retreat does not mean that the bull run has ended. It might be that they have taken a short breather that may lead to a comeback later this year.
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