AI Stock Selloff Deepens as Chip Shares Drop Across Asia

By NewSunSEO | October 18, 2026

Chip and AI-linked stocks slid sharply across Asia and the United States as rising bond yields and tighter financing conditions put the multi-year AI investment boom under heavier scrutiny from global investors. The selloff extended a downturn that began over the summer and is now reshaping how markets price semiconductor, data centre and infrastructure spending tied to artificial intelligence.

How steep was the latest AI-linked selloff?

South Korea’s KOSPI index fell more than 6% in a session, and Japanese memory chipmaker Kioxia dropped 13%, leading losses among AI-related shares in Asia. The KOSPI has now entered its longest losing streak in more than two years and is down about a quarter from its July peak. China’s technology-focused STAR Market has lost more than a third of its value since its July highs. The Philadelphia Semiconductor Index fell 2.7% in US trading, while Samsung Electronics dropped 10% and SK Hynix fell 8% in Seoul.

The session marked the steepest declines since a similar rout in late July. Concerns that first surfaced in June have since spread across credit and equity markets, with investors growing more selective about AI-related debt.

Why are rising bond yields weighing on AI valuations?

Higher borrowing costs are pressuring AI firms because their growth depends on heavy spending on data centres, advanced chips and computing capacity. Higher borrowing costs could slow AI capital expenditure and expose companies that have committed large resources to infrastructure expansion.

BlackRock’s research arm downgraded its view on US equities to neutral on Monday, citing potential volatility around the AI buildout, while turning bullish on short-term US Treasuries. The International Monetary Fund warned in its latest financial stability report that a correction in AI-related investments could have global consequences, acknowledging AI’s contribution to growth but flagging evidence that investment and its eventual economic benefits might fall short of expectations.

Is AI funding getting harder to secure?

Capital markets are showing fresh signs of caution. Firmus, an Australian data centre operator backed by Nvidia, shelved its planned $5 billion initial public offering last week after investor interest weakened. The decision showed how quickly valuation and risk concerns can disrupt funding plans in a sector that has attracted substantial capital.

Tencent Holdings’ dollar and offshore yuan bond sale in Hong Kong drew attention as investors assessed borrowing costs for major technology companies. Guidance for its 10-year dollar notes was around 1.15 percentage points above US Treasury yields, which stood at approximately 5.2%. SoftBank, a major technology investor, sold a record-sized high-yield debt offering last month, promising investors returns of as much as 9.75% on $4.5 billion of bonds with a 7.5-year maturity. Broadcom’s chief executive said on Monday that access to capital was the biggest constraint on growth.

What are investors watching next in the AI trade?

Markets are entering a phase in which investors pay closer attention to the commercialisation of AI technology and the returns companies generate on their investments. Meta Platforms shares rose 3.4% on Monday after the company released a new AI model, showing that positive developments in the sector can still attract buyers.

As borrowing costs rise, AI companies may face greater pressure to show their infrastructure spending can deliver financial returns.

FAQ

What triggered the AI stock selloff in Asia?

Rising bond yields and higher financing costs put pressure on AI-linked valuations, prompting a broad selloff in Asian chip stocks. South Korea’s KOSPI fell more than 6%, Kioxia dropped 13%, and concerns that surfaced in June spread across equity and credit markets.

How are rising bond yields affecting AI investments?

Higher borrowing costs make it more expensive to fund data centres, advanced chips and computing capacity. This raises the bar for the returns AI spending must generate and has led BlackRock to turn neutral on US equities and bullish on short-term Treasuries.

Which companies and indexes have been hit hardest?

Asian chipmakers led the declines, including Samsung Electronics, SK Hynix and Kioxia, while the Philadelphia Semiconductor Index fell 2.7% in the US. The KOSPI has entered its longest losing streak in more than two years, and China’s STAR Market has lost more than a third of its value since July.