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On Tuesday, October 13, Asian markets delivered what a Reuters analysis called the strongest sign yet that the mood on the AI trade — the defining investment story of the decade — is shifting. South Korea's benchmark KOSPI index plunged 5.46% to close at 6,035.35, its fifth straight day of losses and its longest losing streak in more than two years. In Tokyo, memory-chip maker Kioxia collapsed 13%. The US semiconductor benchmark had already dropped 2.7% on Monday. The selling, Reuters noted, is now the heaviest since the same stocks cratered at the end of July.
The numbers behind the rout
The damage was concentrated exactly where the AI trade lives: the chipmakers. Samsung Electronics fell 7.39% to 232,000 won and rival SK Hynix plunged 10.09% to 1.44 million won, according to Korea JoongAng Daily — both on track for a fifth consecutive losing session. Foreign investors dumped a net 4.51 trillion won (about $3.35 billion) of Korean shares in a single day, forcing the Korea Exchange to trigger a sell-side trading halt. The KOSPI is now down roughly a quarter from its July highs, and Shanghai's tech-focused STAR Market has lost more than a third from its July peaks, per Reuters. This is not a single bad session; it is an accelerating repricing.
What broke the spell
Three forces are colliding. First, rising and volatile bond yields are making the economics of AI's colossal capital spending look suddenly fragile — the build-out Reuters compared to a spending spree bigger than America's historic railroad boom. As Damien Boey, a portfolio strategist at Wilson Asset Management, told Reuters, it is not just yields rising but bond volatility itself that is now 'working its way out through asset pricing across the board.' Second, credit investors are getting choosy about AI debt: issuance slowed to about $23 billion in September after a heavy borrowing year, and a data-centre IPO collapsed in Australia last week. Third, competition: reports of rapid progress by Chinese chip rival CXMT on higher-density server memory revived fears that the memory oligopoly may not be as protected as priced.
The quote that rattled the market
Sentiment took another hit from Broadcom CEO Hock Tan, who said many AI investors 'have no clue what they are investing in' and warned that financing could become a bigger problem than chip shortages. Coming from the chief of one of the trade's biggest winners, the comment landed hard. Concerns over OpenAI's revenues and the end of local chipmakers' share buybacks also weighed on Seoul, according to Kiwoom Securities analysts cited in Korean coverage.
Why this time may be different
Cracks first appeared in June, and each bounce since has been sold harder. The uncomfortable question, as Boey framed it, is whether AI capital expenditure simply 'comes off the boil a little bit, and maybe a few players are casualties in that.' Investors now look to Wednesday's US consumer price index report for clues on the Federal Reserve's October rate decision — inflation running hot would tighten the vise further. The bull case still exists: demand for compute is real, and tower and infrastructure stocks have held up. But after nearly four years of nearly uninterrupted belief, the market is finally asking what the AI trade is actually worth. Follow Global Insight for the AI markets story as it unfolds.