This content was published on
July 28, 2026 - 05:01
6 minutes
(Bloomberg) — A selloff in chipmakers deepened as mounting doubts over returns from billions of dollars of artificial-intelligence spending rippled through semiconductor stocks from Wall Street to Asia. Bonds gained as oil retreated.Asian chip major SK Hynix Inc. slumped as much as 13% and Samsung Electronics Co. fell up to 12%, dragging down South Korea’s Kospi Index — a bellwether for AI investments — by 10%. The two companies were the biggest losers in the broader MSCI Asia Pacific equity gauge, which slipped 3.3% and was set for a correction. Japan’s Nikkei 225 Stock Average and Taiwan’s benchmark gauge fell over 4%.The Asian losses followed a selloff in chipmakers on Wall Street, which sent a gauge of semiconductors down for a third day. Nasdaq 100 futures slid as much as 0.8%, pointing to further weakness in technology companies.“Greed has turned into fear for AI-related semiconductor stocks,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Investors are now interpreting every piece of news negatively and using it as an excuse to sell, rather than critically analyzing the true fundamental impact.”Elsewhere, Brent extended Monday’s biggest decline in more than three months, falling another 2.1% to about $86.50 a barrel, as the US paused daily strikes against Iran and President Donald Trump said there’s a “good chance” of an Iran deal. Treasuries gained for a second day as inflation fears eased. The yield on the benchmark 10-year declined two basis points to 4.63%.Alongside geopolitical developments, investors face a packed week of risk events, with policy decisions from the Federal Reserve, Bank of Japan and Bank of England, as well as earnings from megacap tech companies. The recent selloff in chip stocks has also heightened scrutiny of the biggest spenders on AI, with investors looking for signs they can justify the billions of dollars they have poured into the technology.“This is a week with more than its fair share of potential surprises, good and bad,” said Chris Larkin at E*Trade from Morgan Stanley. “Geopolitics and oil prices may be the biggest wild cards, but a bullish response to strong Magnificent Seven earnings isn’t a given, especially if AI spending levels continue to raise eyebrows.”What Bloomberg Strategists Say…As the end of July approaches, there is a whiff of pure panic selling across Asian stocks as investors clamor to lock in what gains they can, or minimize losses. And that is ahead of August, which has been on average the worst month for MSCI Asia Pacific Index over the past two decades.— Mark Cranfield, MLIV. For full analysis, click here.The chip sector losses point to deepening concerns over crowded equity positioning and rising corporate debt levels as the AI buildout progresses. Nvidia Corp.’s fresh round of deals worth more than $750 billion has triggered worries over artificially inflated demand for AI.Growing threats of competition from China have weighed as well.A report from The Information that a Chinese state-backed company has begun mass producing immersion deep ultraviolet lithography machines has been another new cause of concern. Shares of Japanese chip-equipment makers including Nikon Corp. and Tokyo Electron Ltd. both slid more than 9%.“Investors are clearly not yet ready to brush aside concerns over the AI sector,” said Hebe Chen, a senior market analyst at Vantage Global Prime. “The latest selloff in chipmakers shows that doubts over spending, returns and valuations are still deepening rather than fading.”That brings increased attention to a slew of earnings later this week, after last week’s selloff in shares of Alphabet Inc.The owner of Google raised its capital spending forecast to as much as $205 billion this year, reigniting concerns about a lack of fiscal discipline in the race to dominate AI.Microsoft Corp., Meta Platforms Inc., Apple Inc. and Amazon.com Inc. are among the majors reporting this week. In Asia, SK Hynix and Samsung will announce earnings.“The bar is just extremely high right now,” said Dilin Wu, a strategist at Pepperstone Group Ltd. “Beating estimates doesn’t guarantee a pop anymore — we’ve seen that repeatedly over the past few weeks. So part of what we’re seeing today is probably traders trimming ahead of results rather than waiting to find out.”Elsewhere, the policy announcement by the Fed on Wednesday is in focus. Traders continued to see a roughly one-in-three chance of a rate hike.Citadel Securities expects the Fed to raise rates this week — a surprise move strengthening Chairman Kevin Warsh’s credibility in the battle with inflation. A quarter-point increase on Wednesday would reinforce Warsh’s repeated pledge to restore price stability while showing policymakers no longer rely on signaling every policy move well in advance, Frank Flight, the firm’s head of macro strategy, wrote in a note.“The market may once again be underestimating the extent of the hawkish shift at the Fed,” Flight said. A hike this week “would emphatically end the forward guidance era” while underscoring the Fed’s independence, he said.Some of the main moves in markets:StocksS&P 500 futures fell 0.3% as of 11:50 a.m. Tokyo time Japan’s Topix fell 2.7% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng fell 0.1% The Shanghai Composite fell 1.4% Euro Stoxx 50 futures fell 0.2% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1375 The Japanese yen was little changed at 163.73 per dollar The offshore yuan was little changed at 6.7683 per dollar CryptocurrenciesBitcoin fell 2.8% to $63,071.1 Ether fell 3.8% to $1,872.27 BondsThe yield on 10-year Treasuries declined two basis points to 4.63% Japan’s 10-year yield declined one basis point to 2.770% Australia’s 10-year yield advanced three basis points to 5.02% CommoditiesWest Texas Intermediate crude fell 2.2% to $80.83 a barrel Spot gold fell 0.8% to $4,044.95 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Mark Cranfield and Elaine Lai.©2026 Bloomberg L.P.
