HONG KONG, July 16 — Most Asian stocks sank on Thursday as tech firms came under renewed pressure from worries over the AI boom, with Seoul again taking the brunt of the selling.

Regional investors were unable to build on a second day of gains on Wall Street, where more data showing inflation easing pushed back bets on a Federal Reserve interest rate hike to later in the year.

Seoul’s Kospi dived more than six per cent as chip titan SK hynix shed more than 11 per cent amid growing anxiety that the AI rally — which had pushed both firms to record highs this year — has run its course.

Traders are questioning whether the vast sums pumped into the AI sector in recent years can vindicate the eye-watering valuations for some firms.

That comes after Dutch giant ASML, which makes cutting-edge machines to manufacture chips, reported a rise in second-quarter net profit and hiked its sales forecast for the full year.

And on Thursday TSMC announced net profit soared more than 77 per cent to a record high in the second quarter thanks to massive demand for AI hardware. It said it would invest an additional US$100 billion (RM407.4 billion) in the US state of Arizona.

While investors remain confident in the outlook for the AI sector, analysts said the trade had become too crowded.

“The Philadelphia Semiconductor Index had risen roughly 83 per cent this year, valuations had stretched,” wrote SPI Asset Management’s Stephen Innes.

“Strong earnings and healthy demand can keep a trade alive, but they cannot prevent a correction when everyone already owns it.”

He added that investors were not “suddenly questioning whether AI infrastructure demand exists (but) questioning how much of that demand has already been paid for in the share price”.

“The numbers can still be excellent and the stocks can still fall. Once expectations have been pushed into the rafters, even a good result can arrive looking short,” he said.

Elsewhere in Asia, Tokyo — also rich in tech firms — suffered heavy selling, while Shanghai, Singapore and Wellington also dropped. Taipei and Sydney were marginally lower.

Hong Kong was the outlier, climbing more than one per cent as Chinese chip firms, which have been beaten down this year, enjoyed another advance. There were also gains in Manila, Mumbai, Bangkok and Jakarta.

London, Frankfurt and Paris all fell.

The weak performances came even after all three main indexes in New York ended higher thanks to hefty gains in tech giants including Apple, Amazon and Facebook parent Meta.

That came as figures showed US producer prices slipped 0.3 per cent on-month in June thanks to lower energy prices as the United States and Iran reached a truce to reopen the Strait of Hormuz and allow crude to pass through again.

Data from Tuesday showed consumer prices rising less than expected.

The readings soothed market worries that the Fed would hike borrowing costs this month, though analysts warned that the renewed US-Iran hostilities, which have seen them trade strikes for around a week, could undo the good work.

Crude prices were mixed, with traders remaining on edge as traffic through the strait — through which a fifth of world oil and LNG passes — thinned out.

On currency markets, the South Korean won strengthened slightly against the dollar after the country’s central bank hiked interest rates for the first time since 2023 as it tackles stubborn inflation and an economy buoyed by strong chip exports.

And sterling extended gains after rising more than one per cent against the greenback on Wednesday following reports that Britain’s Home Secretary Shabana Mahmood — considered relatively reassuring to markets — was a frontrunner to become the next finance minister. — AFP