A widespread sell-off of artificial intelligence-linked stocks has triggered significant losses for major semiconductor manufacturers across the United States and Asia. South Korea’s Kospi index experienced an 8% drop on Tuesday, prompting a temporary 20-minute trading suspension. Following the pause, the index slipped further to record a 10% decline. This downward trend was primarily driven by heavy losses at tech giants Samsung Electronics and SK Hynix, both of which saw shares drop by over 10%.
This market turbulence follows a 5% decline in Nvidia’s stock on the New York markets this past Monday. As a result, Nvidia surrendered its status as the world’s most valuable publicly traded company to Apple, which has seen a 25% gain this year. The Kospi has now triggered its circuit breaker mechanism eight times this year to mitigate panic selling. Having doubled in value between January and mid-June, the index has since surrendered approximately one-third of its total worth.
Market volatility remains high in South Korea, partly due to increased participation from individual retail investors. Furthermore, Japan’s Nikkei 225 index, also tech-centric, saw a nearly 4.5% decrease on Tuesday morning. Investors are increasingly concerned about the long-term profitability of AI investments, as organizations pour massive capital into infrastructure despite unclear returns on investment. While reports suggest Nvidia may be discussing a $250 billion data-center project with OpenAI, market sentiment remains cautious.
