Stocks in Asia are poised to continue Tuesday's losses after a substantial tech selloff on Wall Street, which intensified worries that the artificial intelligence-driven equity rally has gone too far. Futures for equity indexes in Japan and South Korea indicated declines, though Hong Kong contracts showed modest gains. Contracts for US equities edged higher in early Wednesday trading, after the tech-heavy Nasdaq 100 plunged 3.3% and the S&P 500 dropped 1.4% on Tuesday. A key semiconductor gauge, which had more than doubled from its war-driven lows, significantly slumped about 8%.
The tech selloff initiated with Korean chipmakers and continued into the US session. Tuesday's market slide was termed a "chip-wreck" by one Wall Street strategist, as semiconductor companies that had led this year's stock market advance with triple-digit percentage gains were suddenly met with skepticism about the sustainability of the AI-driven rally. Micron Technology Inc., Marvell Technology Inc., and On Semiconductor Corp., each of which had more than doubled in 2026, led the Philadelphia Semiconductor Index to a 7.9% plunge, with all 30 members of the closely watched gauge experiencing drops.
Separately, the tech rout also impacted global stocks, as apprehension about inflated valuations triggered a new period of volatility after a nearly three-month surge in riskier assets. The Nasdaq 100 declined 3.3%, and the semiconductor gauge fell approximately 8%. Losses were even more severe in Asia, with South Korea's Kospi plummeting 10% from its peak. This significant drop in South Korea was exacerbated by foreign investors offloading over $2.5 billion of Kospi shares, and a wave of selling linked to leveraged exchange-traded funds tracking SK Hynix Inc. and Samsung Electronics Co.
Attention is now turning to Micron Technology Inc.'s results, expected on Wednesday, which will serve as a crucial indicator of whether demand for AI infrastructure remains robust enough to sustain this year's rally. Veteran strategist Louis Navellier described the report as the "grand finale" to a "stunning" earnings season, suggesting that any dips should be seen as a "buying opportunity." Micron shares fell 13% on Tuesday, but are still up over 250% in 2026. Despite the recent selloff, Evercore ISI's Julian Emanuel predicts that tech giants will regain investor favor, with earnings providing the necessary validation after a "furious rally" in April and May.
