International stocks slide as concerns about AI and tech company values spread
International markets plunged late Tuesday as stocks in the Asia-Pacific region sold off on concerns about sky-high values of artificial intelligence and technology companies.
South Korea’s Kospi stock index plunged more than 6%. Japan’s Nikkei 225 average fell about 4.5% and Hong Kong’s Hang Seng index fell more than 1%. Stocks in Taiwan also fell about 2.5%.
Last week, the Kospi hit a record high, fueled by gains in AI stocks.
But on Wednesday, technology stocks performed worst in Asia, with shares of global electronics giant Samsung falling 5.5% and chipmaker SK Hynix falling more than 6%.
SoftBank, a major investor in AI companies, sank more than 14%, wiping out more than $30 billion in market value.
The sell-off came after a day of heavy selling in the United States that ended the recent rally in global markets. The S&P 500 closed Tuesday down 1.1%, the Nasdaq 2% and the Russell 2000 1.8%.
The world’s largest publicly traded company, Nvidia, fell nearly 4% on Tuesday. Palantir, another AI company whose business involves government contracts, fell nearly 8%, even after beating Wall Street profit expectations.
On Monday evening, the CEOs of Goldman Sachs and Morgan Stanley warned that a possible market downturn could be on the horizon. The situation was made worse by poor results Tuesday afternoon from Advanced Micro Devices and Super Micro Computer, both of which make chips used for AI services.
Enthusiasm for artificial intelligence and the companies that produce AI services has been boiling over for months. Companies from Amazon to Microsoft to OpenAI have announced a steady stream of multibillion-dollar deals between them, raising questions about the industry’s sustainability and its funding sources.
U.S. stock futures, an indication of where markets will open, showed losses were likely to continue Wednesday after the opening bell in New York.
S&P 500 futures were forecasting a 0.5% decline and Nasdaq futures pointed to a decline of about 1% on Wednesday.
European markets were also on the verge of falling. Futures on Germany’s benchmark stock index posted a 1.2% decline, while futures on major French and British indexes posted declines of more than 0.5%.
US stocks are coming off a remarkable performance, repeatedly setting recent records. For the year so far, the S&P 500 is still up more than 15%. The Nasdaq Composite, which more closely tracks the largest technology companies, has still gained more than 20% this year.
