Asian tech stocks slide as AI rally loses momentum amid valuation worries

Asian semiconductor and technology stocks resumed their decline on Wednesday, tracking overnight weakness on Wall Street as concerns over artificial intelligence-related valuations continued to weigh on investor sentiment.

The losses came after a brief rebound in chipmakers lost momentum, with investors increasingly questioning whether the sector's rapid gains have outpaced underlying fundamentals.

Chip stocks lead regional declines

Japanese technology and semiconductor shares were among the hardest hit.

SoftBank Group plunged 10% amid a broader selloff in technology stocks and after Bloomberg News reported that efforts to secure at least $6 billion through a margin loan backed by the company's OpenAI stake had encountered difficulties.

According to the report, the company is exploring alternative financing options but could revisit the loan proposal at a later stage.

Elsewhere in Japan, semiconductor equipment maker Advantest fell 3.8%, while Renesas Electronics declined 3.4%.

South Korean technology stocks also came under significant pressure. Memory-chip producer SK Hynix dropped more than 8%, while Samsung Electronics fell 7.45%.

Battery manufacturer Samsung SDI declined more than 5%, and display panel maker LG Display slid nearly 9%.

Taiwan's semiconductor sector was similarly weak. Taiwan Semiconductor Manufacturing Co. fell about 2%, while Hon Hai Precision Industry, a major Apple supplier, dropped more than 4%.

Wall Street weakness spills into Asia

The declines followed a weaker session in the United States, where technology stocks lost momentum after a brief recovery.

The Nasdaq Composite fell 0.97% on Tuesday, while the S&P 500 slipped 0.26%.

A semiconductor rally that had helped support markets earlier quickly faded, with the iShares Semiconductor ETF ending the session down 1%.

The renewed weakness highlighted growing concerns that investors are becoming more cautious toward artificial intelligence-related stocks after an extended period of strong gains.

AI fundraising raises capital rotation concerns

Investors are also assessing whether a wave of major artificial intelligence-related fundraising activity could divert capital away from existing publicly traded technology companies.

Several high-profile offerings are expected to attract significant investor attention in the coming months.

OpenAI confidentially filed for an initial public offering on Monday, further fueling enthusiasm around AI-related investments.

Meanwhile, SpaceX is expected to begin trading on Friday in what is widely anticipated to become the largest initial public offering on record.

Some investors view these transactions as additional catalysts for the artificial intelligence investment cycle.

Others, however, worry that large capital raises and lofty valuations could absorb funds that might otherwise flow into listed technology companies.

Concerns have also emerged that SpaceX's reported valuation of approximately $1.75 trillion could represent another sign of elevated enthusiasm across AI-linked assets.

Markets face multiple risks

Beyond technology valuations, investors are also navigating a growing list of macroeconomic and geopolitical risks.

Oil prices remained relatively stable despite continued tensions between the United States and Iran.

Brent crude rose about 0.2% toward $92 per barrel as traders focused on ongoing diplomatic efforts and the possibility that peace talks could eventually help restore normal shipping flows through the Strait of Hormuz.

Treasury yields also edged higher following a bond-market rally on Tuesday.

Market participants are increasingly balancing concerns about elevated technology valuations, Middle East tensions, and the possibility that inflation could remain persistent enough to require additional monetary tightening.

Attention is now turning to Wednesday's US inflation report, which investors hope will provide greater clarity on the outlook for interest rates.

The data could prove particularly important for market expectations surrounding Federal Reserve Chair Kevin Warsh and whether policymakers will need to keep borrowing costs elevated for longer in response to inflation pressures.

For now, uncertainty surrounding the artificial intelligence trade, geopolitical developments, and monetary policy continues to contribute to heightened volatility across global equity markets.