US inflation reignites sell-off in artificial intelligence stocks

Asian stock markets opened sharply lower on Thursday, after a session already in negative territory on Wall Street triggered by US inflation data that came in above expectations. Fears that higher-than-expected prices could delay or scale back interest rate cuts prompted investors to liquidate positions in the most exposed stocks, starting with those tied to artificial intelligence.

South Korea’s Kospi index lost 7.7%, falling to 5,548.78 points, according to data reported by Euronews Italia. Investing.com Italia, however, reports a 7.2% loss for the same index, while Japan’s Nikkei 225 fell 4.7%. The discrepancy between the two figures on the Kospi likely reflects different measurement points within the same session, but in both cases it represents one of the sharpest declines in recent months for the Seoul stock exchange. The MSCI Asia Pacific index fell nearly 3%, heading toward its lowest level since July.

The shock had originated the previous evening on Wall Street. The S&P 500 shed 1.1%, the Dow Jones fell 0.1%, and the Nasdaq, the index most closely tied to technology stocks, lost 1.9%. The sell-off was concentrated on the names most directly associated with the rush of investment in artificial intelligence: Nvidia lost 3.2%, Broadcom 3.1%, and AMD 5.7%.

The mechanism linking an inflation figure to technology stocks is now well established in the markets: high expected-growth sectors, such as semiconductors and artificial intelligence, are valued primarily on future profits. When expectations for interest rates rise — because inflation remains high and the central bank has less room to ease monetary policy — the present value of those future profits declines, and the stocks that are most expensive relative to current earnings are the first to be sold.

The Kospi’s case also signals just how integrated the Asian semiconductor sector has become within the same sentiment cycle as the United States: Korean companies, key suppliers of components for artificial intelligence infrastructure, suffered a proportionally larger setback than that seen on Wall Street the previous evening, a sign of the amplification effect typical of markets more closely tied to technology exports.

It remains to be seen whether this movement is a temporary adjustment following months of gains concentrated in a narrow group of stocks, or the beginning of a broader reassessment of valuations in the sector. The US inflation figure that triggered the sell-off is not reported in detail by the available sources, an element that remains to be verified in upcoming official releases.

Sources: Euronews Italia, Investing.com Italia