US tech futures took a sharp hit as turmoil in South Korean equities rippled across global markets. Nasdaq futures shed roughly 2% after South Korea's benchmark Kospi index crashed and triggered an automatic trading halt, reigniting concerns that the AI-driven rally powering global tech stocks may be running out of steam.

The Kospi Crash That Started It All

The selloff in Seoul has been dramatic and repeated. The benchmark closed at 7,484.41, down 8.29 percent, marking its steepest decline since March 4, with a market-wide circuit breaker triggered and a sell-side sidecar activated shortly after, underscoring how quickly selling accelerated. The Korea Exchange activated the Level 1 circuit breaker after the index remained down more than 8% from the previous close, suspending all trading on the Kospi shortly after market open, marking yet another jolt for what had been one of the best-performing major markets in the world this year.

The chip giants anchoring the index took the brunt of the damage. Samsung Electronics tumbled 10.2% while SK Hynix dropped 7.7%, as the decline was driven by a combination of a sharp US tech selloff following Broadcom's disappointing guidance, renewed inflation fears tied to US economic data, and heavy foreign investor outflows.

How That Selloff Hit Wall Street Futures

The contagion into US markets was almost immediate, given how deeply intertwined American tech giants are with Korean memory chip supply. Top Nasdaq-100 holdings including Nvidia, Microsoft, Apple, and Broadcom all depend heavily on Korean memory supply, creating a direct pathway for the Kospi's volatility to spill into US futures markets. S&P 500 futures lost 0.53%, and Nasdaq 100 futures slid roughly 1%, while the tech-dominant Nasdaq Composite fell more than 1% during the prior regular session, reflecting how quickly the AI-and-chip selloff theme has been moving across time zones.

The broader "Magnificent Seven" cohort also showed signs of strain heading into this latest bout of volatility. Investors rotated out of major tech names, with Amazon dropping nearly 5% and Meta Platforms falling 2%, while Alphabet shares slipped 5% — their worst daily performance in over a year — amid brain-drain concerns following the departure of two high-profile AI researchers for rivals.

Margin Debt and Leverage Made the Drop Worse

Part of what's made these swings so violent is the sheer amount of leverage built up in Korean retail accounts during the rally. As of June 4, retail margin debt remained at historical highs, totaling 37.74 trillion won, leaving highly leveraged accounts susceptible to margin calls and forced liquidations as prices fell. South Korean financial authorities, including the Finance Minister, central bank, and regulators, issued an emergency statement vowing immediate action against excessive volatility if necessary, while Korea Investment & Securities announced a suspension of margin trading after exhausting its credit limits.

Is This a Warning Sign for the Broader AI Trade?

The episode has reignited a broader debate about whether the AI rally — which has powered much of this year's gains across global equity markets — is becoming dangerously overextended. The crash is a warning for AI stocks with crowded positioning and high sensitivity to valuation; it does not prove the AI cycle is broken, but it shows how quickly optimism can turn into forced selling when rates, currency, and chip sentiment move against the trade.

Not everyone sees doom in the moves, though. NVIDIA CEO Jensen Huang, who was in Seoul during one of the earlier rounds of selling, struck a notably unbothered tone. "Everybody should be very excited," he told reporters. "They can now buy stock at a cheaper price" — a comment that captures the bulls' core argument: that this is a healthy reset in an overheated trade rather than the start of a structural unwind.

For continued, real-time tracking of how these swings are affecting US futures and global equity markets, the CNBC Markets desk remains a leading source for live coverage as the situation develops.

What Comes Next

With Nasdaq futures sliding in sympathy with Seoul's repeated crashes and circuit breakers, the key question for US investors is whether this volatility stays contained to Korea's uniquely leveraged, chip-concentrated market — or whether it marks the start of a broader repricing across the AI trade that has driven much of this year's gains on Wall Street. Given how tightly linked Nvidia, Microsoft, Apple, and Broadcom are to Korean memory supply chains, expect continued sensitivity in US tech futures every time the Kospi has another rough session.