Memory chip stocks dropped sharply in overnight trading ahead of Wednesday after SK Hynix reported quarterly numbers that came in below expectations.

and  stocks dropped 4% each, while MU dropped 2.6%. The Roundhill Memory ETF (DRAM) also declined 4%. South Korea’s KOSPI, where chipmakers SK Hynix and Samsung have significant weightage, faced a major sell-off, was briefly halted, and was down 7.6% just ahead of its close on Wednesday.

While SK Hynix’s results showed exponential growth in the top and bottom lines, they fell short of analysts’ expectations, prompting some to question whether forecasts had become overly optimistic.

“Estimates are BS when you are in mega growth. Execution is so very difficult,” Patrick Moorhead, Chief Analyst at Moor Insights, said in an X post.

“I think we’ve lost our minds to think that this performance wasn’t a blowout performance. Revenue +257% and profits +557% and this is bad?” he wrote, adding that “the decade-long AI build out thesis still stands.”

Memory Volatility Continues

Memory chips remain in high demand and short supply. Producers have raised prices and locked customers into long-term contracts, with those tailwinds clearly reflected in their quarterly results over the past two quarters.

Still, some investors have begun to question whether memory demand can remain elevated as AI models become more efficient, and whether the sector’s blistering stock rally is nearing a cooldown.

A tech rotation is already underway. In July, investors appeared to be selling off chip and chip-adjacent stocks that ran sharply in the past year and putting the money back in Big Tech and software companies.

More recently, China’s advances in AI and semiconductors have come to weigh on trading in the U.S. Moonshot AI’s Kimi K3, which combines near-frontier AI performance with low costs, has gained remarkable recognition since its launch on July 16, while China's largest memory chip firm ChangXin Memory Technologies made a  in Shanghai.

Retail’s View On Memory Stocks

Micron is down nearly 35% from its record high, while SanDisk and Western Digital are down 53.4% and 42.5%, respectively.

On Stocktwits, the retail sentiment was ‘extremely bullish’ for SNDK and SKHY, ‘neutral’ for MU, ‘bearish’ for WDC, and ‘extremely bearish’ for DRAM.

“$SNDK $MU $SPY $QQQ Bulls still saying: Nothing changed fundamentally. Everything Shows that supply is catching up and you bought the top. Bulls got rugpulled,” a trader wrote.

SK Hynix’s Q2 Recap

The South Korean chipmaker’s second-quarter revenue rose 257% year-over-year and 51% sequentially to 79.32 trillion won ($64.64 billion) and operating profit surged 557% to 60.54 trillion won. Wall Street analysts had modeled 84 trillion won in revenue, and 64 trillion won in operating profit, according to estimates from LSEG.

SK Hynix’s first-half revenue topped 100 trillion won for the first time, highlighting strong AI-driven demand. The company sells memory chips and other hardware used in data centers and consumer electronics, and counts U.S. tech giants including Nvidia among its customers.

SK Hynix listed its shares on Nasdaq on July 10 after raising $26.5 billion from U.S. investors.