South Korean shares rallied sharply on Tuesday, with the Kospi climbing as much as 8% after a brutal three-day sell-off erased 15% from the benchmark's record highs. Memory chipmakers spearheaded the rebound, signaling investors remain committed to the artificial intelligence theme despite recent turbulence.

Samsung Electronics led the advance, surging 9.1%, while SK Hynix jumped more than 14%. The dramatic reversal followed Monday's rapid unwinding of an AI-driven rally that had previously propelled the index up over 100% year-to-date, triggering circuit breakers and brief trading halts.

Leveraged exchange-traded funds amplified the volatility on the downside, magnifying losses during the selloff. These instruments, designed to multiply daily returns, created a feedback loop that accelerated the market's descent and subsequent recovery.

Analyst Lee Jongwook of Samsung Securities attributed the wild swings to evolving market structure rather than a fundamental shift in the AI investment cycle. He recommended investors hold or increase positions following the sharp pullback, suggesting the selloff presented a buying opportunity.