The global selloff in semiconductor stocks accelerated this week as investors fretted over stretched valuations among some of the artificial intelligence sector’s biggest winners. South Korea’s Kospi fell as much as 6.2% on Wednesday, marking its steepest drop since last April during US President Donald Trump’s tariff-driven market turmoil. The decline was driven largely by chipmakers Samsung Electronics and SK Hynix, while Japan’s Advantest Corp. plunged nearly 10%, helping drag the Nikkei 225 down more than 4%.
The selloff wiped out roughly $500 billion in combined market capitalization from the Philadelphia Semiconductor Index on Tuesday, while a Bloomberg gauge tracking Asia-focused chip stocks recorded significant losses on Wednesday. The retreat highlights investor concerns over whether the AI-fueled rally, which propelled chipmakers to record highs earlier this year, can sustain its momentum amid high interest rates and mounting doubts about future earnings.
“It’s a sea of red across broad markets, and one that offers a gloomy and damp portrayal of risk,” said Chris Weston, head of research at Pepperstone Group. “We need to remain open-minded to the possibility that this could still further build. Simplistically, there aren’t many reasons to buy here.” Analysts and traders pointed to warnings from Wall Street leaders about an overdue correction, as well as lingering uncertainty around the Federal Reserve’s interest rate policy and the prolonged US government shutdown, which have compounded pressure on tech shares.
Investors also sold shares of companies including Palantir Technologies and Advanced Micro Devices after their earnings forecasts disappointed, following massive price runups earlier in the year. The broader retreat reflects growing unease over sky-high valuations in the semiconductor sector, particularly in areas tied to surging demand for AI computing power.
