Western Digital's stock experienced a 24-hour plunge of 5.05% during Thursday's trading session, reflecting a severe downturn across the memory and storage chip sector. The decline was part of a broader market movement where major US memory stocks saw their losses widen significantly throughout the day.

The sell-off is primarily linked to new regulatory measures announced by South Korea's Financial Services Commission targeting single-stock leveraged ETFs. The changes include raising minimum margin requirements, accepting only cash as collateral, limiting purchases per transaction, and banning new single-stock leveraged product listings. Analysts suggest these regulations specifically target speculative funding active in memory stock trading, making the sector highly sensitive to shifts in market sentiment and liquidity.

Compounding the pressure, a significant earnings forecast downgrade for peer SK Hynix by Korean brokerage KIS triggered contagion across global storage names. Additionally, the artificial intelligence trade continued to lose momentum as Wall Street questioned how long the AI spending boom can last, prompting profit-taking in memory stocks that had accumulated substantial gains driven by AI demand expectations earlier this year. Geopolitical tensions between the US and Iran, along with hawkish commentary from the Federal Reserve on persistent inflation, further dampened overall market risk appetite.