AI Stock Sell-off Deepens, Rattling Markets in Asia and US

Shares of prominent chip manufacturers experienced significant drops in both the United States and Asia, as a broad sell-off in artificial intelligence-related stocks intensified. The volatility has raised concerns among investors about the long-term profitability of the booming AI sector.

Trading on South Korea's benchmark Kospi index was temporarily halted on Tuesday morning after an 8% decline. The index continued to fall after trading resumed, settling around 10% lower. Technology firms led the slump, with Samsung Electronics and SK Hynix each experiencing drops of more than 10%.

This downturn follows a 5% fall in shares of AI chip giant Nvidia on Monday in New York, which resulted in the company losing its position as the world's most valuable listed company to Apple. The tech-heavy Kospi has now seen its stock market trading halted eight times this year, utilizing a circuit breaker mechanism designed to mitigate panic selling. The index had seen substantial gains, more than doubling from the start of the year to mid-June, but has since lost approximately one-third of its value. South Korea's stock market has been particularly volatile in recent months, attracting a large number of retail investors.

In the US, shares of SK Hynix, which recently made a record-breaking debut on the Nasdaq on July 9, fell by 7.5% on Monday, trading well below its offer price. Japan's Nikkei 225, also heavily weighted with technology companies, was down nearly 4.5% on Tuesday morning.

The recent decline in Nvidia's stock value, which fell after The Wall Street Journal reported that the company is in talks to provide approximately $250 billion for OpenAI's data-center project, has contributed to the broader market jitters. Analysts are now questioning whether the massive investments being poured into artificial intelligence development by governments and corporations can be recouped through sufficient profitability.

Meanwhile, Apple's stock has risen by about 25% this year, enabling the iPhone maker to surpass Nvidia as the world's most valuable company.