Asian tech stocks drop with SK Hynix plunging 10% after Wall Street AI names fall

Asian technology stocks fell Thursday, tracking U.S. peers that pulled back in overnight trading, underscoring the heightened volatility in tech names globally.

In Japan,SoftBank Groupdropped 4.36%, while chip equipment makerTokyo Electron was over 5% lower.Advantestlost 2.14%, and Japanese memory chipmakerKioxiadeclined 8.84%.

In South Korea, SK Hynix fell 9.71% and Samsung Electronics declined 6.13%.Seoul Semiconductor dropped 4.27%.

Taiwan’sTSMC, the world’s largest contract chip manufacturer, was 1.46% lower.

Tech stocks have been seeing heightenedvolatility in recent sessions, with South Korea’s semiconductor-heavy market whipsawing between steep losses and record gains.

Despite the heightened volatility analysts remain optimistic over the outlook of the tech sector, with J.P. Morgan saying in a Wednesday note that the tech sell-off in Asia had not derailed AI investment cycle.

While investors have sold off stocks on worries over the sustainability of aggressive AI spending, the bank said it does not expect hyperscalers to cut back on investment.

“Stepping away from the share price moves, we do not see any fundamental indicators that signal meaningful weakness in the next 6-12 months,” J.P. Morgan said.

Global growth is being driven by AI and defense spending, S&P Global said in a report dated Aug. 5. “A growing source of momentum is coming from the technology sector.”

The global purchasing managers’ index output of tech equipment increased in July at the fastest rate since May 2021, S&P Global noted. “Alongside rising demand for software and related IT services, technology reported the fastest growth for ten months,” it added.

Asian technology stocks had surged Wednesday, with SoftBank soaring more than 13%.