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Tech, Chip Selloff Presents Buying Opportunity, Wedbush Says

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Tech, Chip Selloff Presents Buying Opportunity, Wedbush Says

Technology stocks may face spillover impact from the recent sharp selloff in South Korea, though the decline appears to be a "pullback/breather" in a market that nearly doubled this year, Wedbush Securities said in a note on Tuesday.

The brokerage noted that South Korea's Korea Composite Stock Price Index (KOSPI), which was up roughly 90% year to date, fell about 10% on Tuesday.

"We view the KOSPI sell-off as a pullback/breather on a market up almost 100% this year and also believe SK overtaking Samsung was a big symbolic move that caused some investors to worry about an 'overheated' memory chip trade," Wedbush analysts including Dan Ives said.

The analysts said investors should expect periodic "gut check moments" as the technology sector digests rapid gains tied to AI-related spending.

"Our recent Asia checks and overall AI enterprise demand tracking have accelerated over the past few months and are showing no cracks in the armor which continue to make us very bullish on owning the tech AI winners over the coming year," Ives said.

The selloff has heightened investor "nervousness" ahead of earnings from Micron Technology (MU) on Wednesday, as investors closely watch the memory-chip sector, with Ives describing memory-chip companies such as Micron, SK Hynix and Samsung as the "golden jewels" of the AI-driven rally.

Wedbush also pointed to Monday's selloff in Alphabet (GOOG, GOOGL) shares, which the brokerage said gained momentum after reports that DeepMind researcher and Nobel Prize-winning scientist John Jumper left the company for Anthropic.

"This is an AI arms race and we will continue to see a plucking of talent across Silicon Valley over the coming years with Anthropic on offense mode," Ives wrote.

Price: $1118.56, Change: $-92.82, Percent Change: -7.66%

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