South Korean and U.S. memory chip stocks and chip manufacturers have long outperformed the broader market, but this trend is now undergoing a sharp reversal. As of the close on Wednesday, many major companies in this sector have fallen into 'bear market' territory, down more than 20% from recent highs. The following are the factors putting pressure on this sector: 1. The best performance of AI companies may not meet market expectations — Despite Samsung reporting record-breaking profits and astonishing growth forecasts, it failed to win investor favor. Investors have been selling off related stocks, staging a classic 'sell the news' scenario. The market remains concerned about excessive spending by companies on AI infrastructure development. 2. Escalating geopolitical tensions — Trump's latest move to halt the U.S.-Iran memorandum has heightened market anxiety over AI-related trades. If the conflict persists and inflation concerns resurface among investors, the stock prices of the hottest sectors in AI trading could see further declines. 3. Sector rotation triggering a reversal — As the stock returns of AI hyperscale cloud service providers lag behind those of memory chip manufacturers, more and more Wall Street strategists are beginning to predict a reversal of this trend. Mike Wilson, Chief Investment Officer and Chief U.S. Equity Strategist at Morgan Stanley, predicted on Monday that chip manufacturer stock prices would pull back, a forecast that has proven prescient. He now predicts that funds will flow back into the hyperscale cloud service provider sector. While chip manufacturer stock prices approach their highs, some hyperscale cloud service provider stocks appear relatively cheap.