Asia’s massive tech rout marks first real “macro shock” of the AI era
The massive sell-off sweeping through Asia’s technology sector marks “the first real macro shock of the AI era” and exposes just how dependent global markets have become on a single investment theme, warns Nigel Green, CEO of global financial advisory giant deVere Group.
The warning comes as South Korea’s Kospi plunged as much as 8% on Monday, with AI-linked giants Samsung Electronics and SK Hynix leading the declines.
In Japan, SoftBank sank 7.5%, while Tokyo Electron and Advantest fell 6.7% and 5% respectively. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, also came under pressure as selling spread rapidly through Asia’s AI supply chain.
The rout followed a sharp decline in US semiconductor stocks after Broadcom reported quarterly revenue that missed market expectations.
The subsequent sell-off wiped an estimated $1.8tn from S&P 500 market capitalization and sent shockwaves through markets that have become increasingly reliant on AI-related companies for growth and performance.
Just weeks ago, many of the same companies were at the centre of one of the most powerful rallies in recent market history.
Samsung Electronics and SK Hynix had surged to record valuations on the back of AI optimism, helping transform South Korea into one of the world’s best-performing major equity markets.
Nigel Green says: “The speed and scale of the reversal matter far more than the declines themselves.
“Broadcom was merely the trigger.
“What investors are witnessing is the first real macro shock of the AI era.
“Investors have been reminded that expectations can become so elevated that even a relatively modest disappointment can trigger a global repricing.”
Nigel Green argues that the reaction reveals a profound shift in financial markets.
“AI is no longer behaving like a technology sector,” he says.
“It’s now behaving like a macro asset class capable of moving markets, influencing capital flows and shaping investor sentiment across continents.
“The fact that one earnings report from California can trigger selling from Seoul to Silicon Valley within hours is an enormous wake-up call.”
The deVere CEO says many investors continue to think about AI as a sectoral theme when its influence now extends much further.
“AI-linked companies are driving national stock markets, influencing export economies, attracting sovereign capital and shaping institutional asset allocation decisions.
“Very few investment themes have ever reached this level of importance.”
South Korea provides one of the clearest examples. Samsung Electronics and SK Hynix now account for an extraordinary share of the Kospi’s market capitalization, meaning shifts in sentiment toward AI can have a disproportionate impact on the wider market. Taiwan faces a similar dynamic through TSMC’s dominant position within the global semiconductor ecosystem.
Markets have become extraordinarily sensitive to developments within a relatively small number of AI-linked companies.
“The AI trade is now so large that it’s increasingly dictating the mood of global markets.”
The deVere chief executive stresses that he remains firmly bullish on the long-term outlook for artificial intelligence.
Businesses continue to accelerate AI investment, governments are expanding digital infrastructure programmes and demand for advanced computing power remains robust.
But he warns that investors should prepare for further episodes of volatility.
“Investors should expect more moments like this,” he notes.
“Once a theme reaches macro scale, disappointments stop hurting individual stocks and start shaking entire markets.”
He concludes: “This massive sell-off underscores that markets are beginning to discover something much bigger: AI is now macro, and what happens in AI no longer stays in AI.”