Asian Stocks Decline as AI Spending Fears Spur Tech Selloff

By Megan Cheah

Asian stocks fell early Friday, tracking losses in the U.S. as investor anxiety over high levels of artificial-intelligence spending triggered a broad selloff in the technology sector.

A fresh wave of selling hit semiconductor stocks, dragging the Nasdaq Composite lower on Thursday.

Despite better-than-expected earnings from Taiwan's TSMC and Dutch chip supplier ASML, their shares--along with those of other semiconductor names like Intel and Broadcom--remained under pressure, according to Tiger Brokers market strategist James Ooi.

"The selloff may suggest that sentiment towards chip stocks is shifting following their sizable year-to-date rally, with some investors questioning whether current valuations leave sufficient room for further upside, even in the face of solid earnings," he said.

Developments in the Middle East also came back into focus after the U.S. launched another wave of strikes against Iran. The U.S. struck Iranian bridges on Thursday, aiming to cut off supply routes to a port city and naval base in the Strait of Hormuz that Iran uses to attack ships and project power, a senior U.S. official said. Iran has responded by striking U.S. infrastructure in the region and assets of its Gulf allies.

These moves have fueled concerns that the conflict could broaden further, OCBC Group Research analysts said.

Japan's Nikkei Stock Average was last trading 4.4% lower, after dropping below 65000 for the first time since June 12. AI-related stocks lead the declines with Advantest down 11%, SoftBank Group falling 9.7%, and Tokyo Electron shedding 8.3%.

Taiwan's Taiex slipped 4.3%, pressured by a 4.05% decline in TSMC. The chip maker said Thursday it aims to invest an additional $100 billion in the U.S. as part of its strategy to cement its leadership in global semiconductor supply chains. Its U.S.-listed shares closed 2.3% lower overnight.

Hong Kong's Hang Seng Index declined 1.5%, while the FTSE Straits Times Index dropped 0.65%. South Korea's market is closed for a holiday.

Oil prices rose on supply disruption concerns. Front-month West Texas Intermediate crude futures climbed 0.9% to $79.67 a barrel, while front-month Brent gained 0.8% to $84.88 a barrel, bringing weekly gains for both contracts to 12% each.

While oil prices have gained, they remain well below the peak recorded in late April, analysts at ANZ Research noted. "As long as prices stay below $90/bbl, risks to [Asia's] growth and inflation are manageable, in our view," they added.

Meanwhile, spot gold rose 0.3% but traded below the psychologically-important $4,000 an ounce. Softer-than-expected U.S. inflation data earlier this week eased bets of the Federal Reserve tightening and initially supported bullion, but that momentum has faded as bond yields recovered slightly, said Tony Sage of Critical Metals.

Still, continued central bank gold-buying should be able to limit risk of declines over the longer term, he added.

Write to Megan Cheah at megan.cheah@wsj.com

(END) Dow Jones Newswires

July 16, 2026 23:31 ET (03:31 GMT)