A brutal sell-off in Asian semiconductor stocks is forcing investors to ask if the AI spending spree can actually pay off.
South Korea’s KOSPI dropped 6% on Thursday, extending its slide to 27% below June’s peak. Samsung Electronics and SK Hynix, the poster children of the AI chip rally, have swung wildly for days as leveraged retail funds take the hit.
The drop reflects growing unease over ballooning AI capital spending and whether it will ever generate real returns. That question now hangs over Taiwan Semiconductor Manufacturing Co’s second-quarter earnings, due later today. Analysts expect profit to jump nearly 60%, but after ASML’s results disappointed despite strong numbers, traders warn even a beat may not be enough without stellar guidance.
Market Reaction
Asian equities broadly fell as money rotated out of memory and hardware names. European futures held steady for a flat open, while Wall Street futures edged up 0.1% after cooler-than-expected U.S. producer prices and solid bank earnings lifted sentiment overnight. Brent crude climbed 18% over two weeks to $85 a barrel, driven by escalating U.S.-Iran tensions in the Middle East.
Why It Matters
Chip stocks have powered much of this year’s global rally. If TSMC’s results and outlook fail to impress, it could trigger a broader repricing of AI-linked assets across equities and currencies tied to tech exports, like the Korean won and the Taiwan dollar.
What to Watch
TSMC earnings land at 05:30 GMT, followed by U.S. retail sales, jobless claims, and results from Netflix, GE Aerospace, U.S. Bancorp, and State Street. Fed rate-cut odds and oil prices remain the other wildcards.
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Source: Reuters
Time: 1:55 PM EEST
