Stocks Slump as AI Selloff Accelerates, Bonds Gain: Markets Wrap
(Bloomberg) — A selloff in chipmakers deepened as mounting doubts over returns from billions of dollars of artificial-intelligence spending rippled through semiconductor stocks from Wall Street to Asia. Bonds extended gains as oil retreated.
Asian chip major SK Hynix Inc. slumped as much as 11% and Samsung Electronics Co. fell up to 9.5%, dragging down South Korea’s Kospi Index — a bellwether for AI investments — by 8%. The two companies were the biggest losers in the MSCI Asia Pacific equity gauge, which slipped 3%. Japan’s Nikkei 225 Stock Average and Taiwan’s benchmark gauge fell about 4%.
The Asian losses followed a selloff in chipmakers on Wall Street, which sent a gauge of semiconductors down for a third day on Monday. SK Hynix’s American depositary receipts fell below their initial public offering price. Japanese semiconductor stocks such as Tokyo Electron Ltd. and Disco Corp. also tumbled in excess of 9% as investors increasingly questioned the spending spree in the sector after a runup in shares this year.
“Greed has turned into fear for AI-related semiconductor stocks,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Investors are now interpreting every piece of news negatively and using it as an excuse to sell, rather than critically analyzing the true fundamental impact.”
Elsewhere, Brent extended Monday’s biggest decline in more than three months, falling another 1% to about $87.60 a barrel, as the US paused daily strikes against Iran and President Donald Trump said there’s a “good chance” of an Iran deal. Treasuries gained for a second day as inflation fears eased. The yield on the benchmark 10-year declined two basis points to 4.63%.
Alongside geopolitical developments, investors face a packed week of risk events, with policy decisions from the Federal Reserve, Bank of Japan and Bank of England, as well as earnings from megacap technology companies. The recent selloff in chip stocks has also heightened scrutiny of the biggest spenders on AI, with investors looking for signs they can justify the billions of dollars they have poured into the technology.
“This is a week with more than its fair share of potential surprises, good and bad,” said Chris Larkin at E*Trade from Morgan Stanley. “Geopolitics and oil prices may be the biggest wild cards, but a bullish response to strong Magnificent Seven earnings isn’t a given, especially if AI spending levels continue to raise eyebrows.”
Chip companies remained in focus during the US session, with the Philadelphia Semiconductor Index dropping 2.2%.
The cost of protecting Nvidia Corp.’s debt against default surged amid a round of AI deals worth more than $750 billion. ASML Holding NV sank on a report that a Chinese state-backed firm is producing certain chipmaking machines that may threaten its sales.
“Investors are clearly not yet ready to brush aside concerns over the AI sector,” said Hebe Chen, a senior market analyst at Vantage Global Prime. “The latest selloff in chipmakers shows that doubts over spending, returns and valuations are still deepening rather than fading.”
That brings increased attention to a slew of earnings later this week, with more than 170 companies in the S&P 500 set to report. AI spending is in sharp focus after last week’s selloff in shares Alphabet Inc.
The owner of Google raised its capital spending forecast to as much as $205 billion this year, reigniting concerns about a lack of fiscal discipline in the race to dominate artificial intelligence.
Microsoft Corp., Meta Platforms Inc., Apple Inc. and Amazon.com Inc. are among the companies reporting this week. In Asia, SK Hynix and Samsung will announce earnings.
“Those companies embody the critical theme weighing on sentiment in the markets right now — excess capital expenditure and spending by AI companies that, investors fear, will eat into returns,” Kyle Rodda, a senior analyst at Capital.com, wrote in a note to clients.
Elsewhere, the policy announcement by the Fed on Wednesday is in sharp focus. Traders continued to see a roughly one-in-three chance of a rate hike.
Citadel Securities expects the Fed to raise rates this week — a surprise move strengthening Chairman Kevin Warsh’s credibility in the battle with inflation. A quarter-point increase on Wednesday would reinforce Warsh’s repeated pledge to restore price stability while showing policymakers no longer rely on signaling every policy move well in advance, Frank Flight, the firm’s head of macro strategy, wrote in a note.
“The market may once again be underestimating the extent of the hawkish shift at the Fed,” Flight said. A hike this week “would emphatically end the forward guidance era” while underscoring the Fed’s independence, he said.
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 10:22 a.m. Tokyo time Nikkei 225 futures (OSE) fell 4.3% Japan’s Topix fell 2.7% Australia’s S&P/ASX 200 fell 0.2% Hong Kong’s Hang Seng rose 0.3% The Shanghai Composite rose 1.2% Euro Stoxx 50 futures fell 0.1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1375 The Japanese yen was unchanged at 163.75 per dollar The offshore yuan was little changed at 6.7656 per dollar Cryptocurrencies
Bitcoin fell 2.7% to $63,172.75 Ether fell 3.8% to $1,872.1 Bonds
The yield on 10-year Treasuries declined one basis point to 4.63% Japan’s 10-year yield declined one basis point to 2.770% Australia’s 10-year yield advanced two basis points to 5.01% Commodities
West Texas Intermediate crude fell 1.1% to $81.66 a barrel Spot gold fell 0.6% to $4,051.39 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Mark Cranfield.
©2026 Bloomberg L.P.
