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Investing.com-- Asian technology stocks were a sea of red on Friday, tracking an overnight tumble in Wall Street as investors largely soured on bellwether Nvidia amid persistent concerns over an AI-fueled valuation bubble.
Chipmaking and artificial intelligence stocks were by far the worst performers, losing more ground after bruising losses in recent weeks.
The tech-heavy South Korean KOSPI index was the worst performer in Asia, sliding nearly 4%. Chipmakers Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660), which are heavily exposed to the AI trade, slid 5.7% and 8.1%, respectively, and were the biggest weights on the KOSPI.
Chipmaking giant TSMC (TW:2330) slid over 4% in Taipei trade, as did Hon Hai Precision Industry Co Ltd (TW:2317), or Foxconn. Both stocks are key suppliers to Nvidia.
Foxconn also tumbled after signing a supply deal with OpenAI, given that the AI startup is viewed by many as being closely tied to an AI valuation bubble.
Among other major tech decliners, Japan’s SoftBank Group Corp. (TYO:9984), which is heavily invested in AI and tech, slumped 10% in Tokyo trade and was among the worst decliners on the Nikkei 225.
Nvidia supplier Advantest Corp. (TYO:6857) slumped 11%, while chip equipment maker Tokyo Electron Ltd. (TYO:8035) fell 6%.
Major Hong Kong tech shares also tumbled, with AI-exposed stocks logging heavy losses. Baidu Inc (HK:9888) slid 7.3%, Alibaba Group (HK:9988) shed nearly 5%, while Tencent (HK:0700) lost 2.1%.
Semiconductor Manufacturing International Corp (HK:0981), China’s biggest chipmaker, tumbled 5.8%, while Chinese AI chips maker Cambricon Technologies Corp Ltd (SS:688256) lost 5.1%.
Losses in Asian tech came tracking an overnight slump in U.S. tech shares, where the NASDAQ Composite benchmark tumbled more than 2%.
Nvidia closed down 3.2%, reversing an over 5% gain earlier in the session as investors digested the firm’s third-quarter earnings. Nvidia saw a nearly $400 billion swing in valuation on Thursday.
While the firm did clock stronger-than-expected third-quarter earnings, investors questioned its demand forecasts, given that the company’s inventories increased sharply during the quarter. This in turn also raised questions about how Nvidia was recognizing forward revenue.
Sentiment towards Nvidia was further soured by investor Michael Burry, who famously predicted the 2008 financial crisis, criticizing the chipmaker’s earnings, and warning that end AI demand was much smaller than markets were pricing. Burry had disclosed a short position on Nvidia earlier this month.
Comments from CEO Jensen Huang also did little to quell market fears over circular financing in AI, after Nvidia invested in several of its customers, chiefly OpenAI.
Additionally, broader stock markets were also pressured by investors further pricing out expectations for a December interest rate cut by the Federal Reserve. Tech is highly sensitive to changes in lending rates.