Asian tech stocks crash on AI valuation fears

South Korea's Kospi index fell sharply on Thursday, triggering circuit breakers that halted trading, as investors reassessed the cost of capital for artificial intelligence growth. The sell-off spread across Asian markets, with Japan's Nikkei 225 dropping significantly in a session that followed a similar decline on Wall Street. The move was driven by concerns that high and potentially rising interest rates make current valuations for tech stocks unsustainable, even as demand for AI remains strong.

The pressure on Asian markets came after US inflation data released earlier in the week showed a rate higher than expected. That figure led traders to increase bets that the US Federal Reserve would raise interest rates later in the month. On Wednesday, all three major US indices fell, with the tech-heavy Nasdaq Composite suffering the deepest declines. The S&P 500 and the Dow Jones Industrial Average also dropped.

In Seoul, the Kospi's steep decline was fueled by heavy exposure to semiconductor stocks. Samsung Electronics and SK Hynix, South Korea's two largest technology firms, were sharply lower, extending a weekly slide that has seen the index fall significantly. Samsung shares plunged while SK Hynix dropped. A brief trading halt had also occurred earlier in the week due to similar sharp falls.

Charu Chanana, an analyst at Saxo Bank, noted that the sell-off appears to be a repricing of capital costs rather than a sudden deterioration in technology fundamentals. He stated that investors are not questioning whether AI demand exists, but are increasingly questioning the valuation multiple they should apply to that growth given that interest rates are high, volatile, and potentially moving higher again.

In Tokyo, SoftBank Group, an investor in OpenAI, plunged. Chip equipment maker Tokyo Electron dropped. Hiroshi Namioka, a strategist at T&D Asset Management, told Bloomberg that investors are cutting risk and shifting money into safe-haven assets, describing the move as a typical risk-off reaction.

US technology stocks also faced significant selling pressure on Wednesday. Nvidia lost ground, Broadcom fell, and Advanced Micro Devices dropped.

The market turmoil occurred alongside news that Anthropic reported its third-quarter sales had risen to nearly $17 billion. The AI developer told an investor meeting on Wednesday that its revenue had more than trebled since the first quarter of 2026.