AI's reality check
QQQ•Investors sold chipmakers and other technology shares across Asia on Friday as doubts grew about returns on AI investment and possible limits on data-centre development. South Korea's KOSPI was down around 5%, while short-term bonds surged as investors sought safety.
1. AI bets unravel
Investors abandoned chipmakers at the forefront of the AI boom on Friday, with margin calls spreading across Asia and bonds surging as technology bets unwound. Concerns that a Democratic election sweep could slow data-centre development added to existing doubts about whether massive AI investments would generate sufficient returns.
2. Asian markets slide
TSMC shares went limit down at the open in Taipei, where the market was headed for its largest weekly loss since 1999. South Korea's KOSPI recovered from nine-month lows with help from authorities easing margin rules, but remained down around 5%; a bounce in Nasdaq 100 futures struggled to hold.
3. Investors seek safety
Short-term bonds surged as investors reassessed whether central banks would still be inclined to raise rates if AI infrastructure construction, spending and hiring slowed. The cost of default insurance at AI investor SoftBank rose to a four-year high, while US technology-sector credit came into focus for signs of pressure or reduced access to debt funding.
