SK Hynix Slump Marks 'Short-Term Bottom' in AI Stocks Fueled by Forced Liquidations, Says Dan Niles

Tech investor Dan Niles says the severe drop in SK Hynix Inc. (NASDAQ: SKHY ) shares and the broader semiconductor sector represents a “short-term bottom” for artificial intelligence (AI) stocks, attributing the violent selloff to “forced liquidations” rather than a fundamental industry crash.

The ‘Speedbump’ and ‘Forced Liquidations’ Niles’ comments follow SK Hynix’s miss of second-quarter consensus for operating profit, alongside an 11% cut to its fiscal 2026 capital expenditure guidance.

While acknowledging that the guidance cut gives ammunition to investors calling “THE TOP” of the AI cycle, Niles insists this is merely a near-term “speedbump.” He noted that recent market dynamics, driven by “forced liquidations and margin calls in both retail accounts and hedge funds,” have helped form a “short-term bottom” and accelerate a “cleansing process with prime brokers not wanting another Archegos situation.” Given a couple of my friends misunderstood my short tweet yesterday, let me clarify.

My post on Hynix was to acknowledge a datapoint for those calling THE TOP of the AI cycle.

I believe it is important as an investor to not just focus on what is supportive of your investment… — Dan Niles (@DanielTNiles) July 30, 2026 Read Also: Jim Cramer Slams 'SK Hijinx' as SKHY's Record Earnings Meet Brutal Stock Crash: 'We Will Rue the Day We Let This Monster Into Our Markets…' ‘A Strong Rally Ahead’ The recent semiconductor selloff has been brutal.

Niles pointed out that while the S&P 500 dropped only 2.1% and the Nasdaq dropped 6.6% from their June 22 peaks, the SOX semiconductor index plummeted 28.6%.

Furthermore, the Morgan Stanley Momentum Index fell 38.0% and the Momentum TMT Index crashed 53.5%.

He described the “ferocity of these moves” as historically unprecedented.

However, Niles remains strongly bullish on the underlying fundamentals.

He contrasted today’s market with the 1995 tech drawdown, where Windows 95 underperformed expectations and Intel Corp. (NASDAQ: INTC ) was forced to write off $1 billion in inventory.

Today, “there is no excess memory inventories on balance sheets,” he stated.

With the rise of Agentic AI, which requires massive computing power, Niles argues that while the top 1% of companies are minimizing tokens, the remaining 99% are still ramping up.

Consequently, he predicts a “strong rally” for the sectors most impacted by this temporary pullback.

How Has SK Hynix Performed? At the last check, SK Hynix shares fell 4.79% in live Seoul trading.

It was up 106.30% year-to-date, down by 49.32% over the last month and lower by 20.02% over the last five sessions.

Its U.S.

ADR closed down 2.60% at $126.79 on Wednesday, and it was 2% lower in overnight trading.

The ADR was 25.42% lower since its listing earlier in July.

Read Also: GOOGL Fueled S&P 500 Q2 EPS Growth, but Carson Research Says Its Blowout Quarter Came With a Catch Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors.

Photo courtesy: Photo For Everything / Shutterstock.com