Asian markets retreated sharply on Friday as investors reacted to a sell-off in artificial intelligence-related stocks on Wall Street, raising concerns that valuations across the sector may have run ahead of fundamentals.
South Korea’s Kospi led regional declines, falling 4.8%, with technology shares bearing the brunt of the selling pressure. The index had been down as much as 7% earlier in the session following a period of exceptional gains that had seen it almost double over the previous year.
The weakness was triggered by a sharp 12.6% decline in shares of US semiconductor giant Broadcom after its latest guidance failed to meet elevated investor expectations. The disappointing outlook prompted a broad reassessment of AI-related stocks globally.
Other major US technology names also came under pressure overnight, with memory chip manufacturer Micron Technology falling 7.7% and cybersecurity specialist CrowdStrike losing 3.8%.
The impact was felt across Asia’s semiconductor sector. South Korean memory chip producer SK Hynix tumbled 8.4%, while Samsung Electronics declined 5.4%, erasing a significant portion of their recent AI-driven gains.
Japan’s Nikkei 225 fell 1.4% to 66,546.84 despite economic data showing real wages increased for a fourth consecutive month. Technology stocks dominated the declines, with chip equipment manufacturer Tokyo Electron dropping 7.2%.
Elsewhere, Hong Kong’s Hang Seng Index slipped 0.8%, while mainland China’s Shanghai Composite bucked the regional trend, gaining 0.4%. Australia’s S&P/ASX 200 fell 0.5%, and Taiwan’s technology-heavy Taiex declined 1.5%.
The pullback highlights growing sensitivity within the market to earnings expectations and valuations after a prolonged rally driven by enthusiasm surrounding artificial intelligence infrastructure and semiconductor demand.
Despite the weakness in Asia, Wall Street delivered a mixed performance overnight. The Dow Jones Industrial Average surged 1.7% to a record high of 51,561.93, supported by easing concerns over energy prices and the banking sector. The S&P 500 gained 0.4%, marking its tenth advance in eleven trading sessions, while the Nasdaq Composite slipped 0.1% as technology stocks underperformed.
Meanwhile, oil prices stabilised following recent declines. Brent crude rose 0.4% to around US$95 per barrel, helping calm some inflation concerns that have weighed on global markets in recent weeks.
The latest moves suggest investors remain positive on the long-term outlook for artificial intelligence, but are becoming increasingly selective as they scrutinise valuations and earnings growth across the sector.
