Global Markets Stumble as AI Hype Meets Chipmaker Selloff

The contagion hit hardest in Asia, where South Korea’s KOSPI index plummeted over 10% to reach a three-month low. This volatility, reminiscent of the 1997 financial crisis, stems from deepening anxiety over China’s rapid advancements in domestic chip production and the sustainability of the current AI infrastructure boom. Markets are no longer pricing in infinite expansion, but are instead weighing the risks of stretched valuations against the reality of intensifying geopolitical competition.

Beyond the semiconductor rout, broader macroeconomic pressures are clouding the outlook. Investors are bracing for potential U.S. interest rate adjustments while monitoring shifts in oil prices and U.S.-Iran diplomatic tensions. With Microsoft and Amazon earnings reports pending, the tech sector faces a definitive stress test. These results will determine whether the current market instability is a temporary correction or the beginning of a sustained retreat from the year's speculative highs.