Asian Markets Plunge Following Wall Street AI Stock Sell-Off

Asian stock markets tumbled following a widespread sell-off of artificial intelligence-related issues on Wall Street. Japan’s benchmark Nikkei 225 index dropped over 6 percent at the opening before recovering slightly to trade 5.7 percent lower at 57,576.63 by midday.

South Korea’s Kospi recorded a sharp decline of 7.4 percent to 4,985.99, pressured by Samsung Electronics shares shedding 7.9 percent in morning trading. Other regional markets also saw losses, with Australia’s S&P/ASX 200 falling 1.0 percent to 8,973.00, Hong Kong’s Hang Seng dipping 0.7 percent to 24,630.03, and the Shanghai Composite dropping 1.3 percent to 3,642.10.

Global stock markets have faced sustained pressure over valuations of companies benefiting from the artificial intelligence boom. Market participants have raised concerns that the construction of AI data centres could slow down due to high borrowing costs, while critics have argued that AI stock valuations entered bubble territory. Additionally, corporate updates impacted specific equities; Toyota shares declined following lackluster profits, Nintendo fell amid the broader market downturn, and Sony Group saw a slight drop despite reporting strong results driven by its latest Spider-Man movie.

The Asian market drop followed a steep decline on Wall Street. The S&P 500 fell 4.4 percent, marking its worst performance since April 2025. The Dow Jones Industrial Average sank 1,833 points, or 3.4 percent, while the Nasdaq composite tumbled 5.5 percent, placing the Nasdaq 11.9 percent below its record high set the previous month.

Adding to market challenges, US midterm election results showed nationwide victories for Democrats, introducing the possibility that governments could mandate pauses in data centre construction. Voters have expressed concerns regarding AI infrastructure and rising power bills linked to data centres. Any slowdown in data centre development could reduce demand for AI chips, electricity, and supporting services that have served as primary drivers of US economic growth.

Major technology and semiconductor stocks bore the brunt of the sell-off. Nvidia dropped 9.3 percent, becoming the heaviest weight on the S&P 500 and bringing its year-to-date return to a 2.6 percent decline following multi-year annual gains. Advanced Micro Devices tumbled 17.3 percent, cloud AI chip rental provider CoreWeave fell 9.8 percent, and data centre power supplier GE Vernova sank 7.5 percent.

In the bond market, US Treasury yields continued to decline as investors shifted toward safer assets. The yield on the 10-year Treasury fell to 4.84 percent from 4.90 percent. Meanwhile, benchmark US crude rose 0.65 percent to USD 91.11 a barrel, and Brent crude gained 1.4 percent to USD 99.73 a barrel amid ongoing uncertainty surrounding the energy industry and the war with Iran.

"This widespread market correction highlights the delicate balance between rapid technological expansion and macroeconomic realities like borrowing costs and infrastructure strains. For the broader business and startup ecosystem, investor sentiment in deep tech and AI infrastructure is closely tied to regulatory stability, energy availability, and realistic valuation metrics. Startups building around capital-intensive sectors must prepare for cyclical shifts in investor risk appetite and focus on sustainable, long-term operational efficiency." — Dr. Shishir Gupta, Founder & CEO, StartupLanes