Asian and US tech stocks slump on AI financing and capacity fears

Asian stock markets experienced a sharp decline on Thursday, with South Korea hit hardest due to its heavy exposure to AI data center expansion. Key indices saw losses of 10 to 12 percent, driven by rising costs for CoreWeave's debt and a Korean analyst report warning of memory chip overcapacity by 2029. The Kospi index has lost nearly 40 percent of its value since its June peak, a drawdown comparable to previous major financial crises. While European and US markets did not immediately follow the decline, South Korean and Japanese markets showed signs of recovery by Friday.

In the United States, the S&P 500 was off 1 percent from its record set the previous week, while the tech-heavy Nasdaq was down more than 3 percent from its peak. A Goldman Sachs basket of AI stocks lost 20 percent in five trading days. Within the Nasdaq 100, 55 of 100 companies are more than 20 percent below their 52-week highs, and seven have halved, including AppLovin, Rocket Lab, Intuit, Ansys, Western Digital, CoreWeave, and Strategy. The index remains resilient because Apple is only 1.5 percent below its all-time high and Microsoft is 4 percent below.

Memory chip manufacturers SK Hynix, Samsung, and Micron fell between 10 and 25 percent over the last five trading days. The decline was exacerbated by reports that AI provider Anthropic is growing more slowly than previously. TSMC reported a 70 percent increase in third-quarter profit and raised revenue expectations, but its stock remained flat due to concerns about the profitability of new factory investments. Rocket Lab shares fell approximately 10 percent after the company delayed the maiden flight of its Neutron rocket to next year, citing issues with fuel tank manufacturing.