AI Stock Sell-Off Hits Chip Giants Across US and Asia

By Staff, Agencies

Shares of major semiconductor companies tumbled in the United States and Asia as growing concerns over artificial intelligence spending triggered a broader sell-off in AI-linked stocks.

South Korea’s benchmark Kospi index briefly halted trading on Tuesday after plunging 8% before extending losses following the resumption of trading, closing 10.8% lower.

The decline was driven by technology giants, with Samsung Electronics and SK Hynix both dropping more than 13%.

The downturn followed a 5% fall in Nvidia shares in New York on Monday, causing the AI chipmaker to lose its status as the world’s most valuable publicly listed company to Apple.

The Kospi has already experienced multiple trading suspensions this year under its circuit breaker system aimed at limiting panic selling.

The South Korean index had more than doubled from the start of the year through mid-June but has since erased around one-third of its gains amid heightened market volatility and heavy retail investor participation.

Japan’s tech-heavy Nikkei 225 also declined nearly 4%, while US-listed shares of SK Hynix dropped 7.5%, falling below its Nasdaq debut price from July.

Investment director Jane Sydenham said the market pullback followed “phenomenal rises” in recent months, adding that South Korea’s market was particularly vulnerable due to its heavy concentration in Samsung and SK Hynix.

She also noted that widespread stock purchases using borrowed money had intensified the sell-off.

Analysts linked the latest decline to investor concerns over Nvidia’s massive AI investments, including reports that the company is considering a major investment in OpenAI’s data-centre expansion.

The uncertainty has raised questions over whether the huge spending on AI infrastructure will generate sufficient returns.

Apple benefited from the market shift, rising about 25% this year and reclaiming its position as the world’s most valuable company.

Analysts said investors have been attracted to Apple partly because it has been less aggressive in the AI investment race.

Meanwhile, concerns over growing competition from China have added pressure on chip stocks. Investors have taken profits from AI-related shares but may return to the sector later, according to analysts.

China’s largest memory chipmaker, ChangXin Memory Technologies [CXMT], bucked the trend, surging nearly 470% during its Shanghai debut.

The company said it plans to use proceeds from its IPO to expand production and research into memory chips used in AI data centres and electronic devices.

European markets largely avoided the sell-off, with major indexes including the UK’s FTSE 100, France’s CAC 40, and Germany’s DAX 40 opening slightly higher due to their lower exposure to AI-related companies.