Tech Sell-Off Shakes Markets as Investors Question AI Spending and Profitability

Another DeepSeek moment? What's really behind the tech sell-off

Tech stocks are selling off Friday, continuing a poor week, and there could be more to the rout than meets the eye. The apparent trigger for the sell-off is a Thursday report from the New York Times that OpenAI is considering holding off on its initial public offering due to the lackluster performance of SpaceX shares following its own IPO, along with recent volatility in tech stocks. But analysts are pointing to a Chinese artificial intelligence model that looks like it could give OpenAI and its main competitor - Anthropic - a run for their money as a potentially much bigger problem for the tech sector. The launch of GLM5.2 by Hong Kong-listed Z.ai, formerly known as Zhipu AI, is "almost equal" to Anthropic at just a fraction of the price, a Jefferies strategist said. Such a cost advantage could take corporate customer share away from the U.S. frontier models ahead of their IPOs. "This new model is almost equal to Anthropic as a competitor for the corporate market and is just one quarter of the cost in terms of cost per token," Christopher Wood at Jefferies said in the note, citing industry sources. He described the past week to clients as "another DeepSeek moment." Traders at Morgan Stanley on Thursday said the new model from Z.ai has "very impressive coding capabilities." "Enterprises and hyperscalers trading down to cheaper models looks more like a recalibration in willingness to pay for AI, not a deterioration in demand for AI," the traders wrote. The price of high-end AI, which is measured in units called tokens, has been a growing concern for businesses, with multiple companies pulling back on their AI spending and blowing through their AI budgets in recent months. This has led to fears about a price war between OpenAI and Anthropic that could zap valuations prior to their listings. But cheaper open-source AI models that are almost as good as the frontier models are likely an even bigger threat to these expected IPOs and the broader tech sector along with it. "For the bulk of everyday tasks (perhaps 90% of them) [China's DeepSeek's V4-Pro] does much the same job at roughly 1.5% of the cost" of Anthropic's leading-edge Claude Fable 5 AI model, Deutsche Bank's Jim Reid wrote in a June 18 note to clients. The new model from Z.ai likely boasts privacy protections comparable to frontier models, analysts with Jefferies said in their Thursday note. This could lead companies to remove their AI workloads from cloud service providers and back onto their own servers, changing the investment for the AI buildout. "The demand mix is clearly shifting towards lower-cost models," Morgan Stanley traders wrote on Thursday. Between the cheaper international AI model threat and OpenAI reportedly rethinking IPO plans, it's raising concern that the astronomical trajectory forecast for infrastructure spending that's supporting the related stocks could be a bit too optimistic. Micron shares were off by 7% in early trading, while AMD and Intel were off by more than 4% apiece. Oracle is lower as well, capping a 19% decline over the last five days.

Tech stocks tumble on concerns over AI spending

Financial markets received a sharp wake-up call on Tuesday following a sudden wave of selling in major technology shares, triggering widespread doubt over the sustainability of the AI boom. The tech-focused Nasdaq index fell about 2% alongside international chipmakers, reigniting fears that dizzying market valuations have finally run out of momentum after a relentless three-month climb. At the same time, the newly public SpaceX has faced an incredibly choppy session. The aerospace giant's share price plunged below the $150 (£114) mark- its initial floatation price-before staging a modest recovery to $157 despite the broader market anxiety. For months, international stock exchanges have climbed on pure optimism. While this enthusiasm repeatedly pushed indices to unprecedented highs, the sustained 90-day rally left stock prices looking incredibly inflated. On Tuesday, that upward drive vanished as market watchers questioned whether actual corporate adoption of AI can truly justify such expensive price tags. The downturn hit semiconductor players such as Nvidia and Intel the hardest, causing a primary index of global chip firms to slide. This turnaround follows a period where the wider tech sector had more than doubled stock prices from cyclical lows in 2022. It suggests that investors may have moved far too quickly to fund the hardware behind the AI shift. The anxious mood quickly spread to other high-profile assets. Elon Musk's newly public aerospace firm was caught in the crossfire. Texas-based SpaceX has endured highly volatile trading session since going public on 12 June, proving just how vulnerable newly listed companies are when general tech sentiment turns sour. The stock dropped past its widely watched $150 opening price early in the day. However, it managed a slight rebound to settle around $160. Some optimistic traders interpreted the quick bounce as a sign of steady underlying interest in the commercial space sector. Conversely, sceptics argue that these massive price swings only expose the highly speculative nature of today's market. Market analysts are now split on the next move. They disagree on whether this sell-off is merely a healthy, temporary pause or the start of a much larger retreat for tech investments. The more optimistic view suggests that taking profits is a completely standard reaction following a historic run. Bank of America's Vivek Arya supported this perspective. In a note to clients, Arya argued that the combination of sticky inflation and strengthening demand will ultimately drive sector forecasts higher. According to Arya, the industry is simply transitioning from a phase where it had to defend its initial return on investment to one focused on solving physical infrastructure and power constraints. However, a growing number of sceptics counter that, saying cooling corporate IT budgets and broader economic pressures mean the period of easy market gains is over. Reflecting the shift, Danni Hewson, head of financial analysis at AJ Bell, noted that the relative lack of tech stocks on London markets helped the FTSE 100 stay in positive territory, even as Wall Street buckled. As the trading week continues, Wall Street will be closely watching upcoming corporate earnings. That suggests tech giants must prove their massive AI investments are generating real profits rather than just marketing buzz.

Is AI 'one big bubble?' Behind the tech selloff

A wave of selling in tech stocks is starting to reflect doubts over whether the spending boom on artificial intelligence is worth it. The best-known AI-related tech stocks, Nvidia and Google-parent, Alphabet, were down for a second day in a row. Among the biggest losers on Tuesday, however, was chip maker Micron Technology, whose shares plummeted 12%. These selloffs sent the tech-heavy Nasdaq index down around 2% on Tuesday afternoon. Micron's stock is the perfect representation of what's going on in the stock market. It has skyrocketed in value in the past year -- up about 800% -- on soaring demand for memory chips from the AI buildout, showcasing the massive valuations for AI-related stocks. "The market just continues to oscillate between 'AI is going to be great and increase productivity and all these companies are going to win,' and 'AI is a big waste of time and it's not worth the return on investment at all and this is all one big bubble,'" said Gil Luria, head of technology research at investment firm D.A. Davidson. Over $1 trillion spent. "Are we going to start to see returns?" Spending on AI has been monumental. According to Stanford University's AI Index Report, there was more than $580 billion in corporate investment into AI in the past year across the globe, on top of over $1 trillion in the four preceding years. These doubts have led to jitters in the stock market. On Monday, Alphabet stock fell 5%, and SpaceX dropped 16%. That nervousness spilled over into markets in Asia. Korean markets were the worst hit after stocks of Samsung and its competitor SK Hynix fell 12% apiece. This comes at a moment when two of the largest AI companies, OpenAI and Anthropic, are considering selling their stocks to the market in what is shaping up to be two of the largest IPOs in history. Both OpenAI and Anthropic are now generating revenue, but the long-term profitability of generative AI is an open question. "The market is trying to kind of digest all this and saying, 'Are we going to start to see returns?'" said Mark Vena, CEO of SmartTech Research. On Tuesday, it was a rout of chip maker stocks. Intel and Advanced Micro Devices were both off over 5%. Micron took the biggest beating, however, mostly over nervousness ahead of the company's results expected on Wednesday. Analysts say they're watching Micron's earnings to look for signs that the AI investment cycle is continuing apace.

US AI stock sell-off shakes markets from Wall Street to Asia

Losses spread globally as investors questioned soaring valuations and spending on AI infrastructure A tech sell-off shook global markets on Tuesday as attention turned away from developments in the US war with Iran and toward the future of AI companies and chipmakers that have driven stock markets to record highs. The tech-heavy Nasdaq index opened 2% lower on Tuesday. The Dow and S&P 500 were also down at opening. All three major US indices have hit record highs this year, riding off a rush of funding to support AI technology and infrastructure. Nasdaq is up 10% for the year, while the Dow jumped 6% so far this year, breaching past 51,000 points, and the S&P 500 is up 7.3%. But some economists have warned that the influx of AI spending is a bubble reminiscent of the dot-com bubble that burst in the early 2000s. Seven tech companies make up 30% of the S&P 500's value. The heavy reliance on a single industry and a few key companies has some investors wondering if it's a matter of when, not if, there will be a burst. Those concerns have been heightened by signals from the Federal Reserve last week that it may increase interest rates, and therefore the cost of borrowing, in order to tackle rising inflation. Those looking for signs of stumbling may have found confirmation after a series of developments on Monday. The stock market drop started when Google-parent, Alphabet, had its worst day on the market in over a year. A pair of high-profile AI researchers left the company last week, worrying investors. Alphabet's share price had dropped 5% by closing Monday. Elon Musk's SpaceX, which debuted on the market on 12 June to much fanfare, dropped 16% on Monday as the company's post-initial public offering (IPO) boost continued to ebb. On Monday, the company announced it is looking to raise $20bn in a bond sale, even after the company gained more than $85bn through its IPO, sparking concerns over the massive cost of the company's projects. "SpaceX is not yet part of the Nasdaq indices, but the fact that it is jumping on the bond train to fund excessive AI and infrastructure spending revives earlier concerns that Big Tech may be spending too much on AI infrastructure and increasingly financing that spending through debt," said Ipek Ozkardeskaya, senior analyst at Swissquote, noting that Morgan Stanley has estimated that AI-related borrowing will surpass $500bn this year After the US stock market closed for the day on Monday, stocks in Asia appeared shaken by the drops around AI and tech companies. South Korea's benchmark closed 10% down on Tuesday after the country's largest chipmakers, SK Hynix and Samsung Electronics, both closed over 12% lower. Japan's Nikkei 225 was down 3.5% at the close of trading.

Tech stocks tumble for a second day. Here's what's behind the selloff.

Mary Cunningham is a reporter for CBS MoneyWatch. She previously worked at "60 Minutes," CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program. A major technology stock selloff stretched into a second day Tuesday as investors questioned whether artificial intelligence will generate the profits that have fueled lofty valuations for companies such as Alphabet, SpaceX and Nvidia. The tech-heavy Nasdaq Composite shed 580 points, or 2.2%, to close at 25,587. The decline marks a second straight day of losses after a 1.3% decline on Monday. "Today's big falls in tech stocks without any major catalyst are another illustration of rising volatility in these stocks, a result of what increasingly looks like frothy earnings expectations and/or valuations," James Reilly, senior market economist with Capital Economics, said in a note to clients. The drop in tech stocks in recent weeks has put industry stalwarts such as Meta Platforms and Microsoft in "bear" market territory -- when a company's shares drop at least 20% for their most recent peak -- Reilly added. "If the new market leaders, semiconductor firms, also start to struggle, the stock market would be in big trouble," he said. The S&P 500 sank 1.4%, while the Dow Jones Industrial Average fell less than 0.1%. After a rocky start, some tech stocks rebounded by the end of the trading day. Google parent company Alphabet fell 0.8%, while Amazon closed 0.6% higher. Chipmaker Nvidia tumbled 4.2%, while Broadcom sank 3.1%. SpaceX shares ticked up $1.51, or 1%, to close at $156.11. Earlier this month, investors piled into SpaceX stock after the company's initial public offering, sending it above $200 within days. But the stock has retreated since June 17 as investors fret over whether the company can justify its valuation exceeding $2 trillion. On Monday, SpaceX shares plunged 16%. Investors look for reassurance For months, Wall Street has embraced tech stocks, helping drive the market to record highs on optimism that companies pouring billions into AI would translate those investments into faster revenue growth and higher profits. But investors are now demanding more evidence that the spending will pay off. Although apps like OpenAI's ChatGPT and Anthropic's Claude have made a splash among consumers, the vast majority of those users employ free versions of these and other AI tools. For example, new data from the Bank of America Institute show that only about 3% of its customers -- mostly households with more than $125,000 in annual income -- pay for AI services. Those customers spend a median of $20 per month on the apps. Yet usage of the technology is also growing quickly and more broadly, the financial giant noted in a report, underlining AI's enormous commercial potential. The number of households paying for AI services has jumped 38% since 2024, the firm found. Said Bank of America Institute: "As AI becomes embedded across productivity, search, entertainment, shopping and personal assistant use cases, and higher‑tier subscription plans emerge, BofA Global Research expects the U.S. market could scale to $75 billion annually, supported by rising consumer willingness to pay for convenience and time-saving utility." "For a long time, the market treated AI spending as unquestionably positive," Nigel Green, CEO of the financial consultancy deVere Group, said in an email. "Investors are now becoming more demanding. They want evidence that unprecedented spending will translate into unprecedented profits." Global effects The tech rout spread beyond the U.S., with South Korea's Kospi tumbling 10.0% to 8,203.84. Signs of greater regulatory scrutiny in the country's semiconductor sector also added to the hand-wringing. Bret Kenwell, a U.S. investment and options Analyst at eToro, told CBS News that a broader weakness and global volatility in tech stocks is weighing on U.S. shares. While the stock selloff ignited sharp declines, Green said he doesn't believe markets are in trouble. "What we're witnessing now is investors demanding proof instead of promises," he said. "That shift can be uncomfortable, but it's ultimately healthy." Anxiety over interest rates Anxiety is also growing that rate hikes later this year could hamper growth. The Federal Reserve's rate-setting committee last week opened the door to an increase in borrowing costs in 2026, as it seeks to keep a lid on accelerating inflation driven by months of rising oil prices stemming from the war in Iran. Economists forecast that a measure of inflation for U.S. consumers -- due out Thursday from the government -- will have accelerated to 4.1% in May from 3.8% in April. Traders are betting on a nearly 90% chance the Fed will raise its federal funds rate at least once by the end of the year, up from the 57% chance seen just a week ago, according to data from CME Group.

South Korea's favourite AI stocks slide again, drag Kospi index down 8%

Heavyweights Samsung Electronics and SK Hynix, which together account for more than half of Kospi's market cap, fell around 9% each on Friday, forcing the exchange to trigger circuit breakers and halt trading for roughly 20 minutes. Kospi, the benchmark index for the South Korean stock market, tumbled again on Friday after a week of volatility, as AI chip stocks that had made the index one of the world's best-performing markets this year dragged it down. Heavyweights Samsung Electronics and SK Hynix, which together account for more than half of Kospi's market cap, fell around 9% each on Friday, forcing the exchange to trigger circuit breakers and halt trading for roughly 20 minutes. This came after an eventful week for the index, which had already plunged nearly 10% on Tuesday, before rebounding 3.26% on Wednesday as investors returned to semicon stocks, according to reports. Fragile rally These swings follow an extraordinary run. The Kospi is up roughly 95% year-to-date, almost entirely on the strength of the two chipmaker stocks. SK Hynix shares are up about 250% since the start of the year due to surging demand for its high-bandwidth memory chips used in AI servers, while Samsung's stock has gained around 149%. The rise in demand for their chips has taken both companies past the $1 trillion market-value in the last few weeks, making South Korea home to two of the world's roughly one dozen trillion-dollar listed firms. SK Hynix had also briefly overtaken Samsung as Korea's most valuable company on June 22, the first such shift in 26 years, before this week's selloff. Also Read: South Korea overtakes India as world's sixth-largest stock market Two troubling The dependence of the index on merely two stocks is the problem. Samsung and SK Hynix comprise such an outsized share of the index that the same rally that delivered record gains now exposes Kospi to any wobble in these two stocks. This rout is part of a broader global retreat in tech stocks as investors grow uneasy about the scale of AI capex by Big Tech firms, who are collectively planning to spend over $700 billion on AI infrastructure in 2026. ET reported earlier in June that India's benchmarks are isolated from these shocks as its indices are more broad-based without such a heavy skew towards a couple of stocks.

K-Drama on Tech Street: AI rout hits global markets

Technology stocks experienced a significant downturn, pulling major indices lower as a sharp selloff in Korean chipmakers raised concerns about the sustainability of the AI-driven market surge. Nvidia and Micron were among the biggest decliners. This dip, triggered by reports of SK Hynix slowing AI chip expansion, has investors reassessing valuations and demand for AI infrastructure, prompting a cautious approach despite underlying optimism for a swift recovery. Technology stocks tumbled, dragging major indices lower Tuesday, after a selloff in Korean chipmakers stoked concerns about the sustainability of the artificial-intelligence driven rally. The S&P 500 declined 1.1%, with semiconductor makers Nvidia Corp and Micron Technology among the biggest drags on the index. The tech-heavy Nasdaq 100 dropped 2.5%, while the Dow Jones Industrial Average slipped 0.3%. The CBOE Volatility Index briefly shot up over 20. US MarketsPowered By As on 24 Jun 2026, 01:30 AM IST S&P 500 Top Gainers Axon Enterprise433.04(5.61%) CDW130.06(5.25%) GE HealthCare Techs63.72(5.08%) IBM264.94(5.04%) Gainers" S&P 500 Top Losers Micron Technology1,052(-13.18%) ON Semiconductor117.06(-11.01%) Lam Research371.33(-9.33%) Microchip Technology93.26(-9.20%) Losers" Tech is leading markets lower "as a heavy selloff in Asian chipmakers, including a 10% drop in the South Korean KOSPI Index, is dragging broader equity markets lower amid valuation and capex worries," said Tom Essaye, founder of the Sevens Report. The drop in the Kospi triggered a circuit breaker with SK Hynix and Samsung Electronics each plunging more than 10%. It follows a local media report that said SK Hynix is slowing expansion of AI memory chip production and shifting emphasis to the cheaper commodity DRAM, sparking worries among traders over demand for AI datacenters. SK Hynix declined to comment on the report. Micron tumbled as much as 13% ahead of the release of quarterly results on Wednesday. The stock has been this year's top performer in the Philadelphia Semiconductor Index, rallying more than 300% since January before Tuesday's drop. The tech rally has faltered this month as investors worry that share prices may have run up too far, particularly the big tech companies that are spending hundreds of billions of dollars on AI. "Hyperscalers are the new software stocks. The group can't get out of its own way as it leads the Magnificent Seven megacaps lower," Michael O'Rourke, chief market strategist at JonesTrading Institutional Services LLC, wrote in a note to clients. Still, the Nasdaq 100 had risen over 30% since the end of March and some market participants said the breather was likely to be short-lived, given that dip buyers have swooped in after other drops. "People are looking for reasons to hedge yet stay invested," Julian Emmanuel, Evercore ISI chief equity and quantitative strategist, said in a Bloomberg TV interview. The rapid buildout of AI data centres has led to a severe squeeze in more traditional memory chips, including the DRAM products that are used in everything from mobile phones and computers to electric vehicles. Mark Li, a Bernstein analyst who tracks the semiconductor industry, warned earlier this year that memory chip prices are going "parabolic." "Many investors are sitting on large gains with their AI stocks, and any jitters could lead them to cut their position to lock in the gains," said Jian Shi Cortesi, a fund manager at Gam Investment Management. "Right now tech stocks are also particularly sensitive to interest rate outlook and potential Fed rate hikes." Among single-stock movers, Qualcomm shares dropped after the company said it is in talks for a deal to buy AI software firm Modular Inc.

US Stock Market: AI spending fears hammer US tech giants, Alphabet leads selloff

Wall Street's AI-driven technology rally faced pressure as investors questioned whether rising infrastructure spending can generate sufficient returns. While hyperscalers such as Alphabet, Amazon, Meta and Microsoft declined sharply, semiconductor and data storage firms including Micron continued gaining on strong AI hardware demand expectations. Wall Street's technology heavyweights came under pressure on Monday, with artificial intelligence-linked stocks losing hundreds of billions of dollars in market value as investors grew increasingly concerned about the massive spending required to build AI infrastructure. SpaceX dropped more than 10%, extending losses for a third consecutive session after its sharp post-IPO rally last week. The decline came after the Elon Musk-led company announced it would launch a notes offering on Monday. US MarketsPowered By As on 23 Jun 2026, 01:30 AM IST S&P 500 Top Gainers Super Micro Computer35.46(15.66%) ON Semiconductor131.55(8.16%) Corning209.83(7.65%) Micron Technology1,211(6.82%) Gainers" S&P 500 Top Losers Coterra Energy32.56(-8.62%) Moderna59.35(-7.22%) Palantir Technologies119.50(-6.98%) VeriSign247.69(-6.40%) Losers" Among the biggest losers were AI hyperscalers Alphabet and Amazon. Alphabet fell 6%, putting it on track for its steepest single-day decline since May 2025 and wiping out more than $256 billion in market capitalisation. The stock was also weighed down after John Jumper, a senior research scientist at Google DeepMind and a Nobel laureate, left the company to join AI startup Anthropic. Amazon declined 4.8%, while Meta Platforms and Microsoft each slipped about 3%. Collectively, the three companies were poised to erase more than $248 billion in market value. Investors are becoming increasingly cautious about whether the enormous investments being made by technology giants in artificial intelligence infrastructure will generate returns sufficient to justify the spending. The sector-wide weakness reflected broader concerns over rising capital expenditure and the uncertain timeline for meaningful monetisation of AI products. "The broader sector pullback is being driven by ongoing anxiety over tech companies' massive capital spending on AI infrastructure," experts told Reuters. Despite the weakness among hyperscalers, semiconductor and data-storage companies continued to outperform. Memory chipmaker Micron Technology rose 5.8% to a record high after announcing a strategic agreement with Anthropic to help scale next-generation AI infrastructure. "There's a distinguishing aspect of this market between those who are receiving the checks, like memory names, and those who are writing the checks," the expert told Reuters. Micron, along with data storage companies SanDisk and Western Digital, has emerged among the best-performing stocks in the S&P 500 this year, benefiting from strong investor expectations that demand for AI-related hardware and memory solutions will continue to accelerate. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times.)

S&P, Nasdaq drop on semiconductor selloff as AI spending concerns mount

June 23 (Reuters) - The Nasdaq and the S&P 500 fell to over one-week lows on Tuesday, dragged down by sharp losses in semiconductor stocks as investors scrutinized growing debt-funded AI spending and braced for a more hawkish U.S. Federal Reserve. The Philadelphia SE Semiconductor index tumbled 7.6%, while the S&P 500 tech sector index shed 3.2%. Nvidia fell 3.3%, Alphabet lost 1%, while chipmakers Intel, Marvell Technology and Advanced Micro Devices fell between 5.8% and 9.4%. "Some of the news lately about AI raises questions about all the spending that's being done and the capex and ramping of the capacity for semiconductors," said Thomas Martin, senior portfolio manager at Globalt. Concerns over hyperscalers' debt-funded AI spending have contributed to the selloff. Elon Musk's SpaceX, which debuted this month, has joined a list of megacaps tapping the bond market to raise capital. Shares of SpaceX were last up 3.6%, following losses in the last three sessions. Memory chipmakers Micron Technology and SanDisk, among the best performers on the S&P 500 this year, fell 13% and 13.6%, respectively. Micron's earnings results on Wednesday could offer clues on the outlook for the memory and AI chip sector after a searing rally this year. At 2:23 p.m. ET (1823 GMT), the Dow Jones Industrial Average rose 45.86 points, or 0.09%, to 51,758.57, the S&P 500 lost 86.06 points, or 1.15%, to 7,386.73 and the Nasdaq Composite lost 463.45 points, or 1.77%, to 25,703.15. The CBOE Volatility Index, Wall Street's fear gauge, hit an over-one-week high, climbing 1.9 points to 19.12. Six of 11 major S&P 500 sectors moved higher, with consumer staples rising the most at 1.7%. With highly priced tech shares coming under pressure recently, investors have shifted focus to other areas of the market. Heavily battered software shares also popped, with ServiceNow rising 4.2%. Traders are increasingly betting on a second interest rate hike by the U.S. Fed by December, according to LSEG data, compared to expectations of just one 25-basis-point hike two weeks ago, as investors price in hawkish monetary policy under new Chair Kevin Warsh. Personal Consumption Expenditures Price Index data, the Fed's preferred inflation gauge, is expected on Thursday. Investors are keeping a close eye on developments in the Middle East after the U.S. waived sanctions on Iran for 60 days after the first round of talks under a nascent peace deal. Declining issues outnumbered advancers by a 1.22-to-1 ratio on the NYSE and by a 1.04-to-1 ratio on the Nasdaq. The S&P 500 posted nine new 52-week highs and five new lows while the Nasdaq Composite recorded 98 new highs and 149 new lows. (Reporting by Abigail Summerville in New York and Twesha Dikshit and Joel Jose in Bengaluru; Editing by Rod Nickel) By Abigail Summerville, Twesha Dikshit and Joel Jose

Investors Take Some Air Out of AI Stocks, Steep Losses in Seoul

FRANKFURT/SEOUL (dpa-AFX) - Sharp price losses on South Korea's stock market on Tuesday are likely to leave their mark on Europe's equity markets as well. In Asia, investors cashed in part of the immense gains. Semiconductor shares tied to Artificial Intelligence in particular are likely to come under pressure across Europe. South Korea's Kospi index slumped by a little more than eight percent. Trading was temporarily halted due to the large price swings. On Friday, after a rally that began in April, the index had climbed to a record high, but it was unable to hold on to those gains by the end of the session. Shares of semiconductor substrate maker Haesung, for example, plunged by almost 20 percent on Tuesday. Stock in electronics group Hansol Technics shed 16 percent. Chipmaker SK Hynix had only a day earlier overtaken Samsung as South Korea's most valuable listed company. Now both were down by double digits. In pre-market trading in Germany on Tradegate, Infineon fell 3.7 percent compared with the prior day's Xetra close. Shares in chip equipment makers Aixtron and Suss Microtec lost 3.7 percent and 7.6 percent, respectively. Stock in chip wafer producer Siltronic was trading 3.2 percent lower. "Seoul has become the market's most sensitive seismograph for Artificial Intelligence," wrote market expert Steven Innes. That's because the country ties together memory chip production, investment in the semiconductor sector, and trade in these products more tightly than almost anywhere else. Innes also said AI stocks had become everyone's favorite. Investors are currently not asking about AI's technical possibilities, but rather financial questions: "Who ultimately makes the money? Who finances the production buildout? And who pays the interest bill if the technology pays off later than the market expects?"/bek/ag/stk