Global Markets Slide as AI Stock Sell-Off Ripples Across Asia and Europe

By Zoey

Global stock markets mostly moved lower on Friday as a sharp sell-off in major artificial intelligence-related companies on Wall Street spread across Asia, triggering heavy losses in technology shares and prompting investors to reassess lofty valuations that have driven markets higher over the past year.

The decline was particularly severe in South Korea, where the benchmark Kospi index tumbled 5.5% to 8,160.59, marking one of its steepest single-day falls in recent months. The sell-off came after a wave of weakness in U.S. technology stocks raised concerns that investor enthusiasm surrounding artificial intelligence may have become overstretched.

Futures trading in the United States suggested a mixed start to the day. Contracts tied to the S&P 500 fell 0.5%, while futures linked to the Dow Jones Industrial Average edged 0.1% higher, indicating investors were rotating away from high-growth technology shares and into more traditional sectors.

European markets showed greater resilience despite the cautious mood. Britain’s FTSE 100 rose 0.3% to 10,389.74, supported by gains in energy and defensive stocks. Germany’s DAX was little changed at 24,950.24, while France’s CAC 40 gained 0.3% to 8,269.98 as investors weighed the implications of the technology downturn against broader economic conditions.

The pressure on global markets originated on Wall Street, where semiconductor giant Broadcom suffered a dramatic 12.6% plunge after issuing a financial forecast that failed to meet elevated investor expectations. The disappointing outlook raised questions about whether the explosive growth driven by artificial intelligence spending can continue at the pace investors had anticipated.

Broadcom’s decline reverberated throughout the technology sector. Memory chip manufacturer Micron Technology dropped 7.7%, while cybersecurity firm CrowdStrike Holdings lost 3.8%. The weakness among some of the most closely watched technology names fueled concerns that the sector’s remarkable rally may be entering a more volatile phase.

Asian investors responded swiftly, unloading shares linked to artificial intelligence and semiconductor production. South Korea, home to some of the world’s largest memory chip manufacturers, experienced the sharpest impact.

Shares of SK Hynix, one of the world’s leading producers of advanced memory chips used in AI systems, plunged 9.9%. Samsung Electronics, another major player in the global semiconductor industry, fell 6.4%. The declines weighed heavily on the broader Korean market, which had roughly doubled in value over the past year thanks largely to strong gains in technology stocks and optimism surrounding AI-driven demand.

Japan’s Nikkei 225 index fell 1.3% to 66,588.12, with technology companies leading losses despite encouraging economic data. Government figures released Friday showed that real wages in Japan increased for a fourth consecutive month, suggesting household purchasing power continues to improve. However, the positive economic news was overshadowed by investor concerns about the global technology sector.

Tokyo Electron, one of Japan’s largest semiconductor equipment manufacturers, saw its shares slide 6.6% as traders reduced exposure to companies linked to chip production and artificial intelligence infrastructure.

Elsewhere in Asia, Hong Kong’s Hang Seng Index declined 1.2% to 24,961.95, while mainland China’s Shanghai Composite Index lost 0.7% to 4,027.74. Australia’s S&P/ASX 200 slipped 0.7% to 8,625.10, Taiwan’s Taiex dropped 1.3%, and India’s Sensex traded 0.3% lower.

The weakness in equity markets came as oil prices continued their recent retreat, reflecting shifting expectations regarding tensions in the Middle East and the future of global energy supplies.

Brent crude, the international benchmark for oil prices, fell 0.8% to $94.23 per barrel, while U.S. benchmark West Texas Intermediate crude dropped 1.1% to $92.04 per barrel. Despite the declines, crude prices remain significantly above levels seen before the outbreak of conflict earlier this year, underscoring persistent concerns about supply disruptions and geopolitical risks.

Energy markets remain focused on developments surrounding the Strait of Hormuz, one of the world’s most critical shipping routes for oil and natural gas exports. Any prolonged disruption to traffic through the narrow waterway could have significant consequences for global energy supplies and inflation.

While financial markets have recently drawn support from reports of diplomatic engagement between the United States and Iran, uncertainty remains high. American and Iranian negotiators reached a tentative understanding last week aimed at extending a ceasefire, but a final agreement has yet to be concluded.

Additional complications emerged after Hezbollah, the Iran-backed Lebanese militant group, rejected the latest ceasefire arrangement between Lebanon and Israel, raising concerns that regional tensions could continue to threaten stability.

Market participants remain divided over whether ongoing negotiations will eventually result in the reopening of major energy supply routes and a broader reduction in geopolitical risks. Analysts have warned that expectations for a swift resolution may have become overly optimistic given the complexity of the negotiations and the number of parties involved.

Despite the latest pullback, global equities remain near historically high levels after months of gains fueled by strong corporate earnings, continued investment in artificial intelligence technologies and optimism about economic resilience. However, the sharp reaction to Broadcom’s forecast highlighted how sensitive markets have become to any sign that growth in the AI sector may not meet the exceptionally high expectations built into current valuations.

In currency markets, the U.S. dollar weakened slightly against the Japanese yen, falling to 159.94 yen from 160.03 yen. The euro strengthened modestly to $1.1638 from $1.1610, reflecting cautious positioning among investors as they monitored both geopolitical developments and the outlook for global economic growth.

Investors are expected to remain focused on corporate earnings, developments in the technology sector and diplomatic efforts in the Middle East, all of which are likely to play a major role in determining market direction in the weeks ahead.