Semiconductor stocks crash, wiping out $500B in market value
What's the story
A global sell-off in semiconductor stocks has erased over $500 billion in market value. The sell-off affected both Wall Street and Asia simultaneously, as investors cashed in their profits amid concerns of high valuations. South Korea's KOSPI index, which has been the biggest gainer among all Asia-Pacific indices, fell over 6% on Wednesday. Samsung Electronics and SK Hynix led the losses with declines of up to 6% during initial trading hours.
Market impact
Japanese and Taiwanese markets hit hard
In Japan, Advantest Corp. saw its shares plummet by over 10%, dragging the Nikkei 225 index down with it. Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chip manufacturer, also witnessed a decline of over 3%. The broader semiconductor sector, including these companies, has been severely affected by the sell-off in the Philadelphia Semiconductor index on Tuesday.
AI influence
AI-led stocks continue to rise
AI-led stocks have continued to push benchmark indices on Wall Street and some Asian markets to record highs. The trend has continued despite multiple concerns over stretched valuations and fears of prolonged higher interest rates. The latest Wall Street meltdown was triggered by Palantir Technologies, whose shares plummeted over 8% as its forecast failed to impress investors.
Expert opinions
Experts warn of an AI bubble
Chris Weston, head of research at Pepperstone Group, described the current market situation as "a sea of red across broad markets," and warned that there aren't many reasons to buy here. Goldman Sachs Group Inc.'s Retail Favorites Index also slid 3.6% on Tuesday, nearly three times the loss in S&P 500 Index. Xin-Yao Ng, a fund manager at Aberdeen Investments, called it "a necessary and healthy correction," but warned that an AI bubble is forming.