Asian Stock Markets Slide Amid AI Valuation Concerns and Tech Earnings Anticipation

Asian stock markets experienced a deepening rout on Wednesday, driven by growing investor anxiety over artificial intelligence valuations and whether massive investments in the sector will generate satisfactory revenue. The selloff comes ahead of crucial earnings reports from major tech firms and a policy decision from the U.S. Federal Reserve.

In Taiwan, the benchmark Taiex index fell 4.40 percent to 39,772.81, dropping below the 40,000-point mark for the first time since April 30. The decline was heavily influenced by large tech stocks; contract chipmaker TSMC fell 3.29 percent, while memory chip supplier Nanya Technology tumbled 10 percent. These losses followed a 4.49 percent overnight drop in the Philadelphia Semiconductor Index.

South Korea's KOSPI index fell 5 percent, with shares of chip giant SK Hynix dropping 9 percent. Although SK Hynix reported that its quarterly operating profit increased more than sixfold, the results missed analyst expectations, though the company maintained that the risk of memory oversupply remains limited. Other regional indices also declined, including a 1 percent slip in MSCI's broadest index of Asia-Pacific shares outside Japan and a 1 percent drop in Japan's Nikkei.

Investors are closely watching upcoming earnings from "Magnificent Seven" members Microsoft and Meta as a test for the AI trade. Additionally, market volatility has been compounded by geopolitical tensions in the Middle East. Brent futures rose 3 percent to $86.80 per barrel following reports of Iranian ballistic missile attacks, raising concerns about inflation pressures ahead of the Federal Reserve's meeting.