AI Reality Check Sparks Asia Rout As Kospi Crashes 8%, Nikkei Slides 5%

Asian equities suffered a broad selloff on Friday as investors rushed to cut exposure to technology stocks.

With South Korea’s KOSPI plunging more than 8% and Japan’s Nikkei falling nearly 5% amid growing concerns that the artificial intelligence rally had run ahead of fundamentals.

South Korea’s benchmark index slumped 8.2%, triggering a 20-minute circuit breaker that halted programme trading. Japan’s Nikkei 225 dropped 5%, while Hong Kong’s Hang Seng fell 2.4%. China’s CSI300 index lost 2.9% and the Shanghai Composite declined more than 2%.

The broader MSCI Asia-Pacific index excluding Japan fell 3.8%, leaving it on track for its biggest weekly decline in over a year after months of AI-driven gains.

The rout followed a sharp overnight selloff on Wall Street led by Apple, whose shares plunged 6.1% after the company announced price hikes for iPads and MacBooks to offset rising memory and storage chip costs. The decline wiped nearly $250 billion off Apple’s market value and reignited concerns that soaring AI infrastructure costs are beginning to weigh on Big Tech profitability.

The weak session contrasted sharply with the optimism seen a day earlier, when Micron Technology’s stronger-than-expected earnings had reinforced confidence in robust AI-driven semiconductor demand. “Apple’s move suggests higher component costs are beginning to filter through even to the largest technology companies,” Saxo Chief Investment Strategist Charu Chanana told Reuters.

“As AI investment becomes more capital-intensive, investors are becoming increasingly selective about valuations and future returns,” she added.

Technology shares bore the brunt of the selling across Asia. China’s CSI Artificial Intelligence Index fell 5%, while the CSI 5G Communication Index slid 6.3%. AI supply-chain company Zhongji Innolight dropped nearly 6%, and Hong Kong’s Hang Seng Tech Index declined 3.3%, putting it on course for its worst weekly performance since October 2025.

Analysts also attributed the declines to quarter-end profit booking following one of the strongest rallies in years. Even after Friday’s losses, the KOSPI remains up around 62% for the quarter, Japan’s Nikkei has gained about 34%, and the MSCI Asia-Pacific index is still more than 20% higher over the same period.

Adding to the cautious mood, Nasdaq futures fell 1.7% in Asian trading following reports that OpenAI could delay its long-anticipated stock market listing until next year, prompting fresh questions about valuations across the AI sector.

Elsewhere, Brent crude slipped below $74 a barrel after Saudi Aramco resumed shipments from its Ras Tanura export terminal, while the Japanese yen hovered near a 40-year low against the US dollar, keeping markets alert to the possibility of official intervention.

While analysts do not see Friday’s slump as signalling the end of the AI boom, they said it reflects a broader reassessment of lofty valuations after months of relentless gains. Rising costs, heavy capital spending and mounting earnings expectations have left investors increasingly willing to lock in profits at the first sign of weakness.