SK Hynix’s Worst 7-Day Loss Since 2008: AI Bubble Bursting Or Historical Opportunity?

Seven sessions. Seven losses. Nearly a third of the market value of the world’s leading supplier of AI memory chips, gone. Seoul-listed shares of SK Hynix Inc. (NASDAQ:SKHY) have not fallen this far, this fast, since the depths of the 2008 financial crisis. SK Hynix sank 11.06% and Samsung Electronics Co. (OTC:SSNLF) lost 9.48%, during Thursday’s Asian session. South Korea’s Kospi fell 7.57%, also notching its seventh straight decline. The selling was heavy enough that the Korea Exchange halted trading for 20 minutes. Japan’s Nikkei 225 slumped 4.9%, with semiconductors in the firing line. Tech investment giant SoftBank Group Corp. (OTC:SFTBY) dropped 9.3%. Wall Street had set the tone. The iShares Semiconductor ETF (NASDAQ: SOXX) fell 4.5% on Wednesday, its seventh straight loss, for an 11.9% slide over that stretch. Micron Technologies Inc. (NASDAQ:MU) is also on a 7-day losing streak. Chart: SK Hynix Just Notched Worst 7-Day Selloff Since November 2008 What Is Driving The Chip Stock Selloff? On Monday, after ChangXin Memory Technologies presented a new DRAM chip design, SK Hynix fell 10.1% and Samsung fell 7.4% amid fears of increased supply. On Wednesday, hotter-than-expected inflation added to the bearish tone. U.S. consumer prices rose 3.7% from a year earlier in September, up from 3.4% in August and above the 3.6% economists expected. Core inflation, which strips out food and energy, came in at 2.6%, above the 2.5% expected. Hotter inflation raises the odds that the Federal Reserve hikes interest rates again. Higher rates reduce future profits’ present value. They also make the borrowing that funds the AI build-out more expensive. That second point is already showing up in credit markets. The cost of insuring the debt of Oracle Corp. (NYSE:ORCL), SoftBank and CoreWeave Inc. (NASDAQ:CRWV) against default has jumped, in some cases to record levels. "The market is reacting sensitively to whether capital raising will be sustainable and whether massive infrastructure investment will lead to real income, rather than revenue growth itself in AI services," Seo Sang-young, analyst at Mirae Asset Securities, told Reuters. There is also a simpler problem. Samsung and SK Hynix have finished their share buyback programs. Mixo Das, head of Korea equity strategy at J.P. Morgan in Hong Kong, said the market "is struggling to find a new buyer." What History Says After SK Hynix’s Worst 7-Day Loss Since 2008 SK Hynix has lost 31.45% since its Oct. 2 close. According to a TradingView event study, the stock has had a seven-session losing streak that erased at least 25% of its value only 10 times since 2000. All 10 came between 2000 and 2003, during the dot-com bust. One month later, the stock was higher in four of the 10 cases, with a median return of -13%. Three months later, it was higher only three times. Twelve months later, the average loss was 62.4%. Only the July 2003 signal was followed by a gain, of 45.7%. Over the same period, SK Hynix delivered an average 12-month return of 36% on a typical day. Several of those signals clustered in October 2000, so the number of separate episodes is smaller than it looks. SK Hynix’s Seven-Day Crashes Have Rarely Ended Well Every seven-session losing streak since 2000 that erased at least 25% of the stock’s value, and what the stock did next Signal date7-day move1 month later3 months later6 months later12 months laterSep 7, 2000-27.0%-11.1%-60.5%-79.2%-92.3%Oct 13, 2000-28.8%-40.9%-46.7%-77.2%-90.6%Oct 17, 2000-38.9%-24.4%-34.9%-74.7%-89.4%Oct 18, 2000-40.9%-22.0%-29.1%-69.3%-89.6%Oct 19, 2000-43.7%-14.9%-18.7%-61.6%-88.0%Dec 22, 2000-49.1%+93.0%-15.7%-10.1%-43.3%Apr 23, 2002-30.7%-29.9%-48.3%-47.8%-81.7%Jun 7, 2002-46.9%+29.5%+24.4%0.0%-50.5%Jun 10, 2002-51.4%+87.3%+31.0%+15.5%-44.3%Jul 29, 2003-26.6%+14.0%+3.8%+31.5%+45.7%Oct 15, 2026-31.5%????Average–+8.1%-19.5%-37.3%-62.4%Median–-13.0%-23.9%-54.7%-84.8%Times higher–4 of 103 of 102 of 101 of 10Average, any day since 2000–+2.2%+7.0%+14.5%+36.0%Source: TradingView, SK hynix (KRX:000660) daily closes, 2000–2026. Returns measured from the signal date. Read Also: Chip ETF SOXX Falls 7 Days in a Row: History Says It’s a Buy Signal Chip Stocks Now Trade At Extremely Cheap Valuations SK Hynix trades at 3.5 times forward earnings. Micron Technology Inc. trades at 5.2 times. The iShares Semiconductor ETF trades at 18.4 times, down from nearly 32 times earlier this year. That means investors now pay about 40% less for the sector’s expected profits. In 2000 to 2003, Hynix was a heavily indebted company losing money. Today, SK Hynix sells the high-bandwidth memory that AI data centers cannot get enough of. Memory, however, is cyclical. High prices encourage new factories. New factories add supply. Extra supply pushes prices down. As a result, memory stocks often look cheapest just before profits peak. History says a crash of this size has usually marked the start of something worse. Valuations suggest investors are already paying very little for future earnings. Which signal wins depends on whether those earnings hold up. Read Also: ASML Is Sold Out For 2028: Cantor’s Muse Sees 66% Upside For The Stock Image: Shutterstock