The Japan Times - Tech stocks slump on AI jitters; oil falls

"Investors are increasingly worried that cracks are starting to show in the AI trade," said Dan Coatsworth, head of markets at AJ Bell.

The selling in the tech sectors came after Hock Tan, chief executive of the US semiconductor giant Broadcom, likened the AI buying frenzy to gambling.

"A lot of investors have no clue what they are investing in," Tan told a conference in Singapore, saying they "set very extreme expectations only to find out that it's almost like they are in a casino".

The International Monetary Fund weighed in on the debate, warning of an AI correction at the beginning of its annual meeting in Bangkok.

The boom in artificial intelligence -- and the related rush to manufacture semiconductors and build data centres -- has provided a boost to global growth despite geopolitical pressures including the Middle East war.

But "growing evidence suggests that AI capabilities can be delivered at lower investment levels... or that potential economic gains may not be as large as expected", the IMF said in its Global Financial Stability Report.

The IMF forecast that global growth in 2026 would slow less than previously expected because of advanced economies' "resilience" in the face of war-fuelled energy prices, but warned that low-income countries remained vulnerable to the supply shock.

On the trading floors, South Korea's Kospi stocks index tanked 5.5 percent by the close as chip titans SK hynix and Samsung took a beating.

The decline also followed reports that China's CXMT had made progress on new technology to boost memory chip density, which rival firms have also been racing to achieve.

The company is aiming to release a new server-memory product based on the structure by the end of the year, the reports said.

"China continues to narrow the competitive gap with US companies across AI models, humanoid robotics, memory and other parts of the technology supply chain," said Chris Weston, head of research at the brokerage Pepperstone.

"Its ability to develop increasingly competitive products at lower costs is challenging established assumptions around market share, pricing power and the durability of margins," he added.

Japanese stocks also slumped, with chipmaker Kioxia tumbling more than 13 percent on the Nikkei 225, which lost 1.8 percent.

The selloff overshadowed a drop in oil prices that came even as Yemen's Houthis stepped up their attacks on Saudi Arabia, fanning tensions in the Middle East and raising further concerns about supplies.

Traders are looking ahead to the release of earnings from leading tech firms this month and next, hoping for an idea about their outlook for the AI sector in light of rising borrowing costs and recent volatility.

- Key figures at around 1015 GMT -

London - FTSE 100: UP 0.8 percent at 10,738.49 points

Paris - CAC 40: UP 0.3 percent at 7,853.34

Frankfurt - DAX: UP 0.6 percent at 25,416.16

Seoul - Kospi: DOWN 5.5 percent at 6,035.35 (close)

Tokyo - Nikkei 225: DOWN 1.8 percent at 67,777.52 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 24,345.22 (close)

Shanghai - Composite: UP 0.1 percent at 3,800.86 (close)

New York - Dow: UP 0.4 percent at 51,850.55 (close)

Brent North Sea crude: DOWN 1.9 percent at $104.58

West Texas Intermediate: DOWN 2.0 percent at $91.92 per barrel

Euro/dollar: UP at $1.1186 from $1.1156 on Monday

Pound/dollar: UP at $1.3241 from $1.3207

Dollar/yen: DOWN at 158.01 yen from 158.68 yen

Euro/pound: DOWN at 84.47 pence from 84.48 pence

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T.Shimizu--JT