The sell-off in global tech stocks is spreading beyond the stock market, prompting some of the biggest beneficiaries of the AI craze to reconsider their plans to raise funds through public offerings.
On Friday, South Korean memory chip giant SK Hynix stated that it has abandoned evaluating the possibility of its subsidiary Solidigm conducting a initial public offering (IPO) in the United States, due to market volatility and a broader correction in semiconductor stocks.
The South Korean benchmark Kospi index closed up 0.3%. Meanwhile, Japan's Nikkei 225 index closed down 0.3%.
The previous day, Wall Street witnessed a sell-off, with the NASDAQ Composite Index falling by 3%, due to growing doubts in the market regarding the returns on large-scale AI investments. The Philadelphia Semiconductor Index plummeted by 7%.
Research Director Pepperstone wrote in a report on Friday that this wave of selling has spread beyond the more speculative corners of AI trading.
Weston writes: 'This is no longer just the market punishing those AI companies with high leverage and questionable financing efficiency.'
He added that investors are reducing their exposure to the entire AI sector, which includes companies with stronger balance sheets and that have already achieved stable profits.
This round of selling even affected some of the biggest winners during the AI craze.
Due to its leading position in the field of high-bandwidth memory (HBM), and since HBM is a key component of the NVIDIA AI processor, SK Hynix has always been one of the biggest winners in the AI craze.
The company briefly joined the “trillion-dollar club” earlier this year, but a subsequent wave of heavy selling caused it to fall out of that group again. In July, the company raised $26.5 billion by listing American depository receipts (ADR) on NASDAQ, making it one of the largest stock offerings in history.
Its subsidiary Solidigm focuses on NAND flash memory and solid-state drives, and has been considering going public as one of the ways to finance its proposed chip manufacturing facility in the United States; this facility was proposed against the backdrop of the growing storage demands in AI data centers.
SK Hynix stated: "This decision does not reflect any change in the growth prospects or investment needs of Solidigm." The company added that it will continue to evaluate other financing options.
IPO The market is losing momentum.
This turmoil has also affected companies that are already listed on the market. South Korean cloud service provider AI Elice tumbled 32% on its first day of trading on Kosdaq on Tuesday, despite receiving subscription requests for about 400 times the number of shares available for issuance. Its stock price rebounded by 30% the following day, highlighting the severe volatility faced by newly listed technology companies.
Other companies decided to simply not even attempt to enter the public market.
Earlier this month, Firmus, an Australian data center operator supported by NVIDIA, withdrew its IPO plan, which was initially valued at $5 billion, due to weak investor demand for this issuance.
The company stated that the reason lies in the market environment, and claimed that the issuance terms did not fully reflect its growth prospects. The company said it will instead seek private financing.
This round of decline is no longer limited to the AI infrastructure. Despite claiming strong investor demand, smart ring manufacturer Oura postponed its US IPO plans in September due to market uncertainties.
At the time these decisions were made, the overall activity of IPO was also cooling down.
Royal Bank of Canada Capital Markets ( RBC Capital Markets ) stated in a report earlier this month that the global IPO filing amount in September decreased by 33% compared to the same period last year.
Weston writes: "There's nothing more emotional than a falling market, especially when buyers refuse to enter. When the price trend itself encourages more selling, sellers don't need any new catalysts."
