Investing.com — Global chip stocks tumbled on Tuesday as a broad selloff in technology shares swept from Asia through Europe and threatened to drag Wall Street lower at the open, fuelled by mounting concerns over stretched AI valuations and the prospect of higher U.S. borrowing costs.
In South Korea, memory chip giants and , which together account for roughly half of the benchmark index’s market capitalisation, both fell more than 12%. The losses were severe enough to trigger a 20-minute trading halt on the Kospi, the fourth such suspension this year, leaving the index down 10% on the day.
Japanese stocks also fell sharply, with the closing 3.55% lower.
The selling carried into Europe, where , the continent’s most valuable company, slid more than 5% by 04:35 ET (08:35 GMT). , , and each lost between 5% and 8%.
U.S. premarket trading also pointed to a bruising open. fell more than 8%, while and each dropped around 7.8%. , , and lost between 3% and 7%. The fell 4.6%.
The broader futures fell 2.7%, leading declines among Wall Street contracts, with S&P 500 futures down 1.4% and futures off 0.6%.
shares also slipped more than 4% in premarket trading, extending losses after a $400 billion selloff on Monday wiped out much of the gains from its recent market debut.
Traders are now pricing in 50 basis points of Federal Reserve rate increases by December, double the expectation from two weeks ago, as investors adjust to a more hawkish policy stance under new Federal Reserve Chair Kevin Warsh.
Higher borrowing costs risk making the debt-funded AI infrastructure spending that has underpinned much of the sector’s rally more difficult to justify at current valuations. Valuation concerns have been building after a sharp rally earlier this quarter that followed the Middle East ceasefire.
The pullback on Tuesday comes after chip stocks had advanced a day earlier, with the hitting a record high.
Micron is due to report the latest quarterly results on Wednesday, where investors will be looking for clues on the demand outlook for memory and AI chips.
