SoftBank tumbles 9% as Wall Street AI rout spreads to Asia

SoftBank led a broad sell-off in Asian technology stocks on Friday after another sharp decline in US semiconductor shares reignited concerns that massive spending on artificial intelligence infrastructure may be becoming difficult to justify.

SoftBank leads steep losses across Asia

SoftBank shares plunged 9.2%, while Japanese chip equipment maker Tokyo Electron fell 9% and semiconductor testing company Advantest slid 9.4%, tracking steep overnight losses on Wall Street.

Japanese memory chipmaker Kioxia dropped more than 14% after a federal jury in Texas ordered the company to pay $229 million in damages for infringing a Viasat patent related to computer memory technology.

South Korea's markets were closed for a public holiday. However, SK Hynix had already fallen more than 11% in Thursday's trading.

TSMC falls despite upbeat earnings

Taiwan Semiconductor Manufacturing Co. (TSMC) declined 3.64%, a day after reporting better-than-expected quarterly profit.

The company also raised its full-year capital expenditure forecast to $60 billion-$64 billion, up from its previous guidance of $52 billion-$56 billion.

Despite the stronger outlook, investors focused on growing concerns that the semiconductor industry's aggressive AI investment cycle may no longer justify current valuations.

Chinese technology stocks also weaken

The sell-off spread to Chinese technology companies listed in Hong Kong.

Tencent slipped 1.3%, Meituan lost 2.4%, and Kuaishou fell 3.3%. Meanwhile, Baidu eased 0.7%, while Alibaba declined 1.3%.

Wall Street losses weigh on global AI stocks

The weakness followed another difficult session for US technology stocks, with the Nasdaq Composite falling 1.47% as semiconductor shares came under renewed pressure.

The VanEck Semiconductor ETF dropped nearly 4%, while Arm Holdings fell more than 5%. Micron Technology, Advanced Micro Devices (AMD) and Broadcom each lost more than 5%, while US-listed shares of SK Hynix tumbled more than 13%.

Investors question AI spending surge

Andrew Jackson, strategist at Ortus Advisors, said investors viewed TSMC's strong earnings as insufficient to support further gains in AI-related stocks.

"Another wipe out for US tech and AI with recent momentum winners taking another leg lower after TSMC's earnings yesterday in Asia were not seen as strong enough to justify further upside for the sector and raising concerns over excessive spending," Jackson said.

He added that the latest decline reflected an unwinding of crowded AI momentum trades rather than a deterioration in the sector's long-term fundamentals.

The latest losses extend a broader reversal in global AI-related shares after months of strong gains, as investors increasingly question whether lofty valuations can be sustained while spending on AI infrastructure continues to accelerate.