Asian stocks slump after US tech rout amid AI jitters
Asian markets tumbled on Friday following a massive selloff in US tech stocks, with Japan's Nikkei 225 falling 5.5% and South Korea's Kospi plunging as much as 8.8%.
The tech rout began on Wall Street Thursday, where the Nasdaq fell 5.52% and the S&P 500 plunged 4.4%, wiping as much as $2.5 trillion in market value. Investors grew anxious about colossal AI spending plans and their potential returns, particularly for companies building AI infrastructure like data centers.
Asian tech giants hit hard
Asian markets reacted sharply to the US selloff. Samsung Electronics plunged nearly 10%, while SK Hynix slid over 11%. Taiwan Semiconductor Manufacturing Company (TSMC) also suffered significant losses. Japanese chip-related shares including Tokyo Electron and Kioxia fell 9% and 13% respectively.
Political concerns add pressure
The US midterm elections, which saw Democrats gain control of Congress, added to market concerns. Several Democratic governors-elect campaigned on slowing AI development and promised to stop or pause data center construction amid growing public opposition. This political shift has intensified investor doubts about the future profitability of AI investments.
European stock futures fell 1%, indicating the selloff was likely to spread globally. The dramatic market movements suggest a significant shift in investor sentiment toward AI-related investments.
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