Asian Markets Crash as AI Rout Hits US Stocks; Kospi Plunges 8%

AI Spending Doubts Trigger a Broad Asian Equity Retreat

A sharp reversal in US technology shares has put Asia’s chipmakers, data-centre suppliers and heavily backed AI businesses under pressure.

A sharp reversal in technology stocks

Asia’s technology-heavy markets came under intense selling after US stocks suffered their steepest decline since the tariff-triggered “Liberation Day” rout in April 2025. South Korea’s KOSPI fell more than 8% and triggered a circuit breaker before recovering some ground; it was last down 7% after trading resumed. Japan’s Nikkei dropped 6%, while Taiwan’s market was down more than 8%.

The shock followed a 5.5% fall in the Nasdaq and a 12.2% drop in the Philadelphia Semiconductor Index. The Nasdaq has now lost 12% from its record closing high a month ago, while about $3 trillion was wiped from S&P 500 companies. European stock futures were down 1%, pointing to the possibility of further spillover.

Investors are questioning the AI investment case

The pullback reflects more than political uncertainty. Investors are also reassessing whether the enormous sums committed to AI infrastructure can generate adequate returns. That concern has made chipmakers and data-centre equipment suppliers especially exposed: companies in South Korea, Taiwan and Japan had already fallen in the sessions before Friday’s wider rout.

Samsung Electronics fell nearly 10%, SK Hynix slid 11.7%, Kioxia plunged 14% and TSMC was down 8.5%. These moves show how quickly doubts about future AI spending can affect businesses tied to the technology’s physical infrastructure. They do not, by themselves, establish that demand has weakened; rather, they signal that investors are less willing to overlook uncertainty around the scale and payback of investment.

Political and funding risks add to pressure

Political jitters have added another layer of risk. Investors are concerned that Democrats’ strong showing in the midterm elections could bring greater scrutiny to the AI boom. The selling also suggests markets are beginning to consider local opposition to new data centres and the costs such projects may impose on communities. These are investor concerns, not evidence that specific restrictions have already been introduced.

Financing conditions are another vulnerability, particularly for smaller companies that may find it harder to raise money amid higher interest rates and tighter financial conditions. CoreWeave, a neocloud company viewed as a barometer of sentiment on AI spending and borrowing, fell 10%. Its five-year credit-default-swap spreads widened to a record, indicating increased market concern about its credit risk. SoftBank Group, an AI investor, dropped 11%, while the cost of insuring its debt against default rose to its highest level in four years.

A shift toward caution, not a settled outlook

The scale of the declines points to an abrupt change in risk appetite, with market participants warning that crowded positions and forced selling can intensify losses. The response in other markets has been consistent with a move toward caution: bonds were poised to gain in Asia, the US dollar weakened against the yen and Swiss franc, and the 10-year US Treasury yield stood at 4.838%, near its lowest level since September 9.

For investors, the key distinction is between a sharp repricing of expectations and a confirmed deterioration in the AI business outlook. The supplied market signals show rising concern about returns, funding and regulation, but do not settle how those risks will affect future demand. Further swings are possible as investors test whether this reassessment is limited to valuations or signals a broader change in spending plans.

Key Highlights

• The KOSPI triggered a circuit breaker after falling more than 8%; it was later down 7%.
• Japan’s Nikkei fell 6%, while Taiwan’s market declined more than 8%.
• Samsung Electronics, SK Hynix, Kioxia and TSMC all recorded steep losses.
• CoreWeave fell 10% as its five-year credit-default-swap spreads reached a record.
• Bonds were poised to rise in Asia as the dollar weakened against the yen and Swiss franc.

Investor Note: The selloff highlights the risks of concentrated exposure to AI-linked shares, especially when valuations depend on large future investments delivering returns. Investors may want to track evidence on spending, funding conditions and regulatory developments rather than treating a single volatile session as a definitive verdict on the sector.