Asian AI stocks plunge, casting doubt on region's tech boom
Photo: Falling shares of Asian AI companies raise investor doubts (Getty Images)
The sudden drop in shares of Asian technology companies last week alarmed investors and cast doubt on the record-breaking growth of the artificial intelligence and semiconductor markets, according to Bloomberg.
The sharpest decline since April reflected the narrow breadth of the rally, dependence on retail investors, and growing uncertainty about when the U.S. Federal Reserve will lower interest rates.
"Last week’s selloff is a reminder that Asia’s market structure is just more vulnerable," said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.
Growth of Asia’s tech sector this year
This year, Asia’s technology sector has outperformed its US counterpart, driven by lower valuations and excitement sparked by China’s breakthroughs in artificial intelligence — particularly by DeepSeek.
The MSCI Asia Pacific Index has risen 24% in 2025, putting it on track to outperform the S&P 500 by the widest margin in 16 years.
However, the rapid rise has sparked concerns about market overheating. The Korea Exchange warned of the risks posed by SK Hynix Inc., whose shares have surged more than 200% this year.
The sharp decline last week
The MSCI Asia technology index fell 4.2% on Wednesday — the steepest drop since the April shock caused by U.S. import tariffs.
South Korea’s Kospi dropped 6.2%, and Japan’s Nikkei 225 fell 4.7%. Key suppliers to Nvidia Corp., including SK Hynix and Advantest Corp., were hit the hardest, each losing about 10%.
Market concentration risks
Analysts note that Asia’s excessive losses reflect a structural issue — the extraordinary concentration of tech giants in regional benchmarks.
Taiwan Semiconductor Manufacturing Co. (TSMC) now accounts for over 40% of Taiex, triple its share a decade ago.
In South Korea, Samsung Electronics Co. and SK Hynix together make up around 30% of the Kospi.
Japan is no exception: the five leading Nikkei 225 stocks represent roughly 38% of the index’s total weight.
"If anything goes wrong with the AI or semiconductor boom, the Nikkei will plunge immediately. I do think we’ll continue to see more corrections and heightened volatility going forward,” said Takehiko Masuzawa, head of equity trading at Phillip Securities Japan in Tokyo.
AI sector news
Earlier, RBC-Ukraine reported that Microsoft AI is forming a new team tasked with developing a so-called “humanistic superintelligence” designed to support and empower people.
Meanwhile, Google announced that it has made access to the AI Mode in the Chrome mobile browser significantly easier.
