Stock Picker Attributes AI Sell-Off to Meme Traders and Geopolitical Concerns

By the Editorial Team · Sunday, August 2, 2026

London-based Blue Whale fund saw its value drop 20% in July due to retail investor withdrawals, geopolitical tensions, and speculative trading impacting global AI stocks. Despite losses, the fund manager views the downturn as a buying opportunity in undervalued firms like South Korea's SK Hynix, signaling confidence in a long-term recovery.

A London-based fund manager has attributed last week’s sell-off in global artificial intelligence (AI) stocks to a combination of retail investor withdrawals, heightened geopolitical tensions, and speculative trading. Stephen Yiu, manager of the Blue Whale fund, which counts prominent investor Peter Hargreaves among its backers, said the fund experienced a 20 percent decline in value during July, falling from £2.9 billion amid the market turbulence.

Yiu cited what he described as “low-quality” retail capital exiting the AI sector amid concerns about corporate AI spending, intensifying competition from Chinese firms, and recent escalations in the Middle East, particularly the conflict involving Iran. He also pointed to the influence of so-called meme stock trading within the AI market, highlighting companies like SpaceX as examples of speculative activity contributing to volatility.

One notable factor in the downturn was the sharp decline in shares of South Korean semiconductor manufacturer SK Hynix, a major holding for Blue Whale. The company’s shares dropped nearly 33 percent after it reported financial results that fell short of market expectations. This decline significantly impacted the fund, which had previously benefited from well-timed investments in AI-related technology firms such as Nvidia.

Although Yiu expressed dissatisfaction with the recent performance, he indicated that the sell-off created an opportunity for Blue Whale to increase its position in SK Hynix at a lower price. He emphasized confidence in Hynix’s long-term earnings potential, stating that the company’s shares are now more attractively priced.

The volatility extended beyond individual stocks to broader market activity. South Korea's stock exchange paused trading multiple times in response to the heightened selling pressure. Meanwhile, U.S. markets also faced a sharp correction, particularly on the Nasdaq index, which underpins many technology stocks. However, the Nasdaq recovered by the end of the week, ultimately reporting modest gains. Contributing to the rebound was Microsoft, which posted an 18 percent increase in stock value for the week, driven by strong sales and profits.

Overall, the recent AI sector sell-off reflected a mix of investor behavior, corporate earnings concerns, and geopolitical developments, underscoring the complex factors affecting technology markets worldwide.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.