Is The AI Bubble Starting To Crack?

Why South Korea could be giving investors an early warning... and why we've already been taking profits.

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For the last two years, there has only been one story.

AI.

Every earnings call.

Every investment conference.

Every portfolio.

Every headline.

Artificial Intelligence has become the market's golden child.

And deservedly so.

The technology is extraordinary.

The long-term opportunity remains enormous.

But markets don't move in straight lines.

Neither do expectations.

And right now...

I think one of the most interesting warning signs isn't coming from Silicon Valley.

It's coming from South Korea. Yes really!!!!

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Something has changed.

Over the last couple of weeks we've witnessed extraordinary volatility across Korean technology stocks.

The KOSPI has experienced repeated sharp sell-offs.

SK Hynix has fallen close to 15% in a single session.

Samsung has suffered significant declines.

Leveraged products linked to those companies have, at one stage, fallen more than 30%.

This isn't normal volatility.

It's a change in psychology.

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Investors aren't asking the same question anymore.

Six months ago the question was...

"How much AI infrastructure do we need?"

Today...

It's becoming...

"Have we already built too much?"

That shift matters.

Because markets don't simply react to fundamentals.

They react to changing expectations.

Meta's announcement that it plans to monetise spare AI computing capacity has sparked concerns that perhaps hyperscalers have overbuilt.

Suddenly investors aren't worrying about a shortage of chips.

They're wondering whether there could eventually be too many.

That's a very different conversation.

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Why Korea matters.

South Korea sits right at the heart of the AI supply chain.

Companies such as Samsung and SK Hynix have been some of the biggest beneficiaries of the AI boom.

When investors become nervous about future AI demand...

These stocks often react first.

They're effectively the market's early warning system.

Does that automatically mean U.S. technology stocks will follow?

No.

But it certainly deserves watching.

Because if investors begin questioning AI spending...

Future earnings...

Or capacity expansion...

Then the pressure could very easily spread through the entire AI ecosystem.

Especially after such an extraordinary run.

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Meanwhile...

We've been doing exactly what we always do.

Adapting.

Last week markets sold off sharply across Europe.

Rather than panic...

We used the weakness to selectively add exposure into markets including the CAC and the DAX.

Less than a week later...

Markets rebounded.

We've already taken profits across a number of those positions.

Exactly as planned.

Grinding away.

Capturing opportunities.

Managing risk.

Yesterday we also added exposure into the FTSE following another bout of weakness.

Will we reduce that exposure as well if markets continue to rally?

It genuinely wouldn't surprise me.

Because that's the process.

Not chasing markets.

Not falling in love with positions.

Not hoping.

Simply responding to the probabilities in front of us.

Sometimes we're aggressively invested.

Sometimes we're partially invested.

Sometimes we're almost entirely underexposed.

And we're perfectly comfortable with that.

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That's the difference.

Too many portfolios are built around one philosophy...

Buy.

Hold.

Hope.

We simply don't believe that's enough.

Markets change.

Sentiment changes.

Opportunities change.

Risk changes.

Your portfolio should change too.

Sometimes the highest-probability decision isn't buying.

Sometimes it's taking profits.

Sometimes it's doing absolutely nothing and waiting patiently for better odds.

That's what we've been doing throughout this latest period of volatility.

And it's exactly why our clients trust the process.

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One final thought...

The AI revolution isn't over.

Not even close.

I remain incredibly optimistic about what AI will achieve over the next decade.

But every great investment story experiences corrections.

Every great bull market has periods where expectations get ahead of reality.

The question isn't whether volatility will arrive.

It always does.

The question is...

Will your portfolio adapt when it does?

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Clients...

Thank you for continuing to trust us.

We'll keep doing exactly what we've always done.

Managing risk.

Taking opportunities when they present themselves.

And patiently waiting for the next high-probability move.

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Prospects...

If you've been following TPP for a while...

Ask yourself one question.

Is your current investment manager adapting to markets... or simply riding them?

If you'd like to see how we approach volatile markets differently...

Book a FREE consultation below.

It might just change the way you invest forever.

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👉 BOOK A CALL BY CLICKING HERE.

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TPP strategies trade leveraged instruments, including equity index futures. Leverage magnifies both gains and losses, and the value of your investment can fall as well as rise. You may get back less than you invest. Capital is at risk.

*TPP client accounts have returned an average of 19.47% year to date, accurate as of 1st July 2026 and referring to the average of all client accounts. Past performance is not a reliable indicator of future results.

Disclaimer: The views expressed in this article are the author’s own and should not be considered to render any legal, business or financial advice. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only.

Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.

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TPP is a trading name of UCapital Asset Management LLP.  UCapital Asset Management LLP is authorized and regulated by the FCA - Financial Conduct Authority - with registration number 477155. Registered Company number OC333807..Our past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any investment strategy or product made reference to will be profitable, equal any corresponding historical performance or be suitable for your portfolio. There is a substantial risk of loss in trading financial markets. Past performance is not indicative of future results.

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