(Nov 5): The global sell-off in semiconductor stocks is accelerating on concern over lofty valuations for some of the artificial intelligence (AI) boom’s biggest winners.
South Korea’s equity benchmark Kospi plunged as much as 6.2% on Wednesday, the most since an April hit from US President Donald Trump’s sweeping tariffs, after chipmakers Samsung Electronics Co and SK Hynix Inc dragged on the gauge. In Japan, Advantest Corp dropped nearly 10%, helping pull the Nikkei 225 down more than 4%.
Selling pressure trimmed roughly US$500 billion in combined market capitalisation from the Philadelphia Semiconductor Index on Tuesday and a Bloomberg gauge tracking Asian chip stocks on Wednesday.
The sell-off underscores how stretched the AI-fuelled rally in semiconductor stocks has become after hitting record highs. Chipmakers have added trillions in market value since a low in April as investors bet on soaring demand for AI computing power. The pullback signals the growing unease over the sector’s earnings potential and sky-high stock valuations, particularly if interest rates stay higher for longer.
“It’s a sea of red across broad markets, and one that offers a gloomy and damp portrayal of risk,” said Chris Weston, the head of research at Pepperstone Group. “We need to remain open-minded to the possibility that this could still further build. Simplistically, there aren’t many reasons to buy here.”
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Wall Street chiefs’ warning of an overdue correction combined with reduced expectations for Federal Reserve rate cuts and the prolonged US government shutdown have weighed on the sector.
Investors also dumped shares of companies from Palantir Technologies Inc and Advanced Micro Devices Inc as their forecasts failed to impress following massive run-ups in share prices amid this year’s AI boom.
Uploaded by Tham Yek Lee
