Asian stocks slide as SK Hynix results intensify AI valuation concerns

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Highlights

Asian markets fell sharply as AI valuation concerns spread.
SK Hynix shares dropped despite record earnings growth.
The KOSPI extended its steep two-day decline.
Investors remain cautious ahead of major tech results.

The KOSPI index fell 5.98% to 5,663.25. Reuters reported that the benchmark had dropped by more than 11% at one point after plunging over 10% on Tuesday. Taiwan's stock market declined by about 5%, while Japan's Nikkei lost 2.6%. The broader MSCI Asia-Pacific Index excluding Japan fell more than 2.4%, extending its 3.6% decline from the previous trading session.

SK Hynix falls despite record earnings

SK Hynix closed at 1.401 million won, down 149,000 won, or 9.61%, after its second-quarter results fell short of elevated analyst forecasts. The company reported revenue of 79.32 trillion won and operating profit of 60.54 trillion won, compared with market expectations of roughly 84 trillion won and 64 trillion won, respectively.

The miss overshadowed growth that would ordinarily be considered exceptional. Revenue increased 257% from a year earlier, while operating profit rose 557%. Both figures reached quarterly records, supported by higher prices for high-bandwidth memory, server DRAM, and enterprise solid-state drives used in AI infrastructure. First-half revenue also surpassed 100 trillion won for the first time.

The reaction showed how demanding expectations have become for companies at the center of the AI trade. Investors were looking beyond rapid earnings growth for evidence that long-term supply contracts, capital spending, and shareholder returns could sustain the rally. SK Hynix expects annual investment to reach the high-40-trillion-won range as it expands production capacity.

Regional selloff spreads beyond Korea

The pressure extended across Asian technology markets as investors reduced exposure to semiconductor and AI-linked shares. Concerns include stretched valuations, competition from Chinese chipmakers, and uncertainty over whether large technology companies will generate adequate returns from their infrastructure spending.

Nasdaq futures and European equity futures also moved lower during Asian trading, suggesting the retreat could spread beyond the region. Hong Kong's Hang Seng was an exception, rising as other major Asian benchmarks declined.

A harder test for the AI trade

The selloff suggests that strong demand and record profits may no longer be enough to support premium chip valuations. SK Hynix remains a major supplier of advanced AI memory, but its decline shows that markets now expect companies to beat forecasts while also providing greater visibility on future contracts, investment returns, and shareholder distributions.

Upcoming earnings from large U.S. technology companies will offer another test. Any evidence that AI spending is producing weaker cash returns could deepen pressure on Asian suppliers whose valuations depend heavily on continued data-center expansion.

We also reported oil rises after Iran's missile attack on U.S. forces.

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