Semiconductor and AI-linked stocks were among the biggest decliners. South Korea’s SK Hynix fell more than 5%, while Japan’s Kioxia dropped over 9%. Samsung Electronics slipped about 4% and Advantest declined 4.7%, reflecting broader caution toward companies exposed to the AI investment cycle.
The selloff in chip stocks followed calls from major AI executives for a more measured pace of model development amid growing concerns over the risks associated with increasingly powerful systems. Anthropic CEO Dario Amodei called for the industry to slow down development and adopt stronger safety measures, with OpenAI CEO Sam Altman and xAI CEO Elon Musk backing the broader push.
Investors are increasingly questioning whether the earnings generated by AI-related businesses will be enough to justify the enormous infrastructure spending required to build and run increasingly advanced models. That has left high-valued technology stocks vulnerable to sharp moves whenever concerns emerge over spending, returns or the pace of AI adoption.
At the same time, rising crude prices added to the pressure on Asian markets. Brent crude climbed more than 2% on Monday and was last around $107 a barrel, after gaining nearly 9% last week.
Fresh attacks involving Saudi energy infrastructure and shipping in the Gulf have heightened concerns over disruptions to global oil supplies, while a planned Oman meeting on reopening the Strait of Hormuz was postponed.
The prospect of a prolonged period of elevated oil prices is also raising concerns over inflation and interest rates. Markets are now pricing in an increased probability of a 25-basis-point Federal Reserve rate hike on Wednesday, following hotter-than-expected US inflation data.
Investors are also assigning a high probability to a quarter-point rate increase by the Bank of Japan later this week.Japan’s Nikkei 225 fell 1.7%, while South Korea’s benchmark index dropped 3.3%. MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.8%. US equity futures also pointed to a weaker opening, with Nasdaq 100 futures down around 1%.
Higher bond yields are adding another layer of pressure to equity valuations, particularly in technology stocks where expectations for future earnings are already elevated. The 10-year US Treasury yield remains close to 5%, while the two-year yield posted a sharp rise last week.
Still, some investors believe a moderation in AI development and spending could ultimately benefit the sector by giving companies more time to generate returns from the computing infrastructure already being deployed.
The key question for markets, however, remains whether the current pace of AI investment can translate into earnings strong enough to support elevated valuations.
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