International markets experienced a significant downturn on Tuesday evening, with stocks throughout the Asia-Pacific region suffering losses amid escalating concerns about the soaring valuations of artificial intelligence (AI) and technology companies.
In South Korea, the Kospi stock index saw a dramatic plunge of over 6%. Japan’s Nikkei 225 average declined by approximately 4.5%, while Hong Kong’s Hang Seng index dropped more than 1%. Taiwan’s market wasn’t spared either, with stocks falling around 2.5%. This sell-off followed a week in which the Kospi had reached record highs, largely driven by gains in AI stocks.
Tech stocks bore the brunt of the declines across Asia. Shares of global electronics leader Samsung fell by 5.5%, and chipmaker SK Hynix experienced a decline of over 6%. SoftBank, a prominent investor in AI enterprises, plummeted more than 14%, erasing over $30 billion in market value.
The downturn in Asia was compounded by a significant sell-off in the United States on Tuesday, which halted a recent global market rally. The S&P 500 closed down 1.1%, the Nasdaq dropped 2%, and the Russell 2000 declined 1.8%. Additionally, Nvidia, the world’s largest publicly traded company, saw its stock fall nearly 4%. Palantir, another AI-focused firm engaged in government contracts, saw its shares sink almost 8% despite surpassing Wall Street’s earnings expectations.
Warnings from the CEOs of Goldman Sachs and Morgan Stanley about an impending market pullback added to the unease. Compounding the situation were disappointing earnings reports from Advanced Micro Devices and Super Micro Computer, both of which manufacture crucial chips for AI applications.
The excitement surrounding artificial intelligence has surged over recent months, with major corporations such as Amazon, Microsoft, and OpenAI announcing a series of multibillion-dollar contracts, prompting skepticism regarding the industry’s viability and its funding sources.
Preliminary indications suggested that the downward trend might persist into Wednesday’s markets in the U.S., where stock futures pointed to further losses. S&P 500 futures signaled a potential drop of 0.5%, while Nasdaq futures indicated a decline of roughly 1%.
European markets were also expected to reflect this sentiment, with futures for Germany’s benchmark stock index showing a decrease of 1.2%, while major indexes in France and Britain anticipated dips of more than 0.5%.
Despite the recent tumult, U.S. stock markets have enjoyed an exceptional streak, with the S&P 500 still up more than 15% year-to-date. The Nasdaq Composite, which closely tracks the performance of the largest tech firms, has seen gains exceeding 20% thus far in the year.
