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AI stocks slide tied to margin calls, heavy leverage unwinds
The selloff was accelerated by widespread margin calls, including a case where one hedge fund sold all holdings after a margin call.
A sharp AI stock correction has been attributed more to a margin unwind than to deteriorating fundamentals, according to Yahoo Finance.
In July, more than 3% of South Korean adults received margin calls, and the article points to the widespread use of leveraged 500% margin loans that were wiped out. Investors focused on major AI-linked names such as SK Hynix and Samsung, and one hedge fund, Situational Awareness LP, sold all of its holdings after a margin call, with the manager seeking to raise funds after steep losses.
The piece argues that as the margin unwind calms, fundamentals for select AI-related companies are improving. It highlights Alphabet, saying its cloud platform supports AI applications and services, and it cites 82% year-over-year growth in that platform segment and 24% year-over-year overall revenue growth in the second quarter.
Yahoo Finance also spotlights Micron Technology as a leading memory-chip supplier and frames the recent dip as creating an opportunity, though the provided text cuts off before additional valuation details are included.