Chips off the table as tech and AI stocks face jitters
SMH•Tech and AI stocks fell as investors weighed concerns about the AI boom ahead of US earnings season. Samsung and SK Hynix plunged almost 10% each, while the Kospi dropped 6%; the IMF warned that weaker AI investment or profitability could trigger asset-price corrections.
1. Asian chip stocks slide
Samsung and SK Hynix plunged almost 10% each on Tuesday, the Kospi fell 6%, and Tokyo's Nikkei also dropped sharply as technology stocks including SoftBank declined. The selloff began in thin US trading late Monday, with market participants pointing to reports that Chinese chipmaker CXMT was catching up with competitors and to comments from Broadcom's chief executive about casino-like investment behavior in AI stocks.
2. IMF flags AI risks
The IMF warned that a slowdown in AI investment or declining profitability could trigger an asset-price correction, with growing leverage potentially acting as a catalyst. Its review of 14 circular-financing transactions since 2023 found about $300 billion in equity investments and $650 billion in debt in exchange for $1.4 trillion in future revenue commitments.
3. Other market developments
The stock-market decline supported bond markets, while crude oil rose above $106 a barrel on Monday as conflict escalated in the Middle East and Ukraine. The IMF raised its global growth forecasts for this year and next, saying AI demand and trade were outweighing pressure from the energy shock, and urged central banks to keep tightening policy against inflation risks.
