International markets fell sharply on Tuesday night, with stocks selling across the Asia-Pacific region on concerns about soaring prices for AI and technology companies.
South Korea’s Kospi stock index fell more than 6%. Japan’s Nikkei Stock Average fell about 4.5%, and Hong Kong’s Hang Seng Index fell more than 1%. Taiwanese stocks also fell by about 2.5%.
Last week, the Kospi hit an all-time high as artificial intelligence stocks rose.
But tech stocks fared worst across Asia on Wednesday, with shares in global electronics giant Samsung falling 5.5% and semiconductor maker SK Hynix falling more than 6%.
SoftBank, a major investor in AI companies, fell more than 14%, wiping out more than $30 billion in market capitalization.
The sell-off followed a day of heavy selling in the United States that ended recent gains in global markets. The S&P 500 index closed down 1.1% on Tuesday, the Nasdaq index down 2% and the Russell 2000 index down 1.8%.
Nvidia, the world’s largest publicly traded company, fell nearly 4% on Tuesday. Palantir, another AI company whose business involves government contracts, fell nearly 8% despite beating Wall Street profit expectations.
Late Monday, the CEOs of Goldman Sachs and Morgan Stanley warned that a potential market pullback could be looming. The situation was made worse by disappointing Tuesday afternoon earnings results from Advanced Micro Devices and Super Micro Computers, which make chips used in AI services.
Enthusiasm for companies creating artificial intelligence and AI services has been flowing for months. Companies from Amazon to Microsoft to OpenAI are announcing one multibillion-dollar deal after another, raising questions about the sustainability of the industry and its funding sources.
U.S. stock futures, which show where markets will open tomorrow, showed on Wednesday that losses are likely to continue after the opening bell rang in New York.
On Wednesday, S&P 500 futures were down 0.5% and Nasdaq futures were down about 1%.
European markets could also fall. Futures on Germany’s benchmark stock index fell 1.2%, while futures on major French and British indexes fell more than 0.5%.
U.S. stocks have come off a spectacular rally and have repeatedly hit recent highs. So far this year, the S&P 500 is still up more than 15%. The Nasdaq Composite Index, which more closely tracks the biggest tech companies, is still up more than 20% this year.
