Stocks slide as AI chip rally runs out of steam
TL;DR:
- Asian tech stocks fell sharply as a Broadcom-led semiconductor selloff entered a second day.
- South Korea’s Kospi dropped as much as 7%, with Nasdaq and S&P futures also lower.
- Analysts say AI demand has not vanished — but sky-high expectations now need ever-better guidance to satisfy investors.
The AI trade that has powered global markets paused for breath on Friday, as investors took profits on technology shares and turned defensive. Asian markets tumbled, led by South Korea’s tech-heavy Kospi, which plunged as much as 7% after chipmaker Broadcom’s underwhelming results triggered a selloff that spread through the semiconductor chain. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.8%, while Nasdaq futures eased 1.1% — though European and FTSE futures were broadly flat.
Expectations, not demand, are the problem
The mood captured a shift Resultsense has tracked as the AI-bubble debate intensifies. “Korea has been one of the biggest beneficiaries of the AI memory supercycle, so when Broadcom disappointed on AI expectations, investors quickly de-risked the whole semiconductor chain,” said Charu Chanana of Saxo. Her diagnosis: “The issue is not that AI demand has disappeared — it is that expectations had become extremely high, and even good numbers are no longer enough unless guidance keeps moving higher.” Cryptocurrencies extended their slide, with bitcoin heading for a 15% weekly fall, its worst since the FTX collapse in late 2022.
For UK investors, the read-across is to sentiment rather than direct exposure — sterling was steady around $1.34 and FTSE futures barely moved. But the froth matters: the same week brought Alphabet raising $80bn for AI, a reminder of how much capital is riding on continued momentum. When a single chip miss can wipe billions off Asian indices, the concentration risk in the AI rally becomes hard to ignore.
Looking forward
Attention now turns to US non-farm payrolls, with markets braced for any data that shifts Federal Reserve expectations. For AI-exposed portfolios, the episode is a warning that valuations leave little room for disappointment — and that volatility, not just growth, is part of the AI trade.