Global stocks slump as chip jitters and energy fears grip investors

• Global stocks fell on Friday as investors fretted about tech stocks and energy prices.

• AI chip stocks tumbled in Asia as sky-high valuations and rising volatility spooked markets.

• Japan’s Kioxia has lost half its value since peaking after a blockbuster AI-fueled stock surge.

Global stocks slid on Friday as investors soured on tech stocks and worried about energy prices surging again.

AI companies have been reporting stellar profit growth in recent days, but have also pledged to spend hundreds of billions building out AI infrastructure, leading some investors to question if they’ll ever see a return on their huge outlays.

Meanwhile, Iran has threatened to close a key Red Sea oil route if the US attacks Iranian infrastructure, which would further disrupt global energy markets that have been roiled by the closure of the Strait of Hormuz in recent months.

“The crisis of confidence over heady tech valuations has intensified with a sell-off spreading across markets,” Susannah Streeter, Wealth Club’s chief investment strategist, said in a morning note.

“This nervousness is combining with trepidation about the escalation of conflict in the Middle East as higher energy prices look set to bed in,” Streeter added.

Here’s where key markets stood at 6:00 a.m. ET on Friday:

• S&P 500 futures: -0.9%

• Nasdaq 100 futures: -1.8%

• Dow Jones futures: –0.7%

• Germany’s DAX: -0.8%

• Euro Stoxx 50: -1.3%

• Hong Kong’s Hang Seng: -1.8%

• Shanghai Composite: -3.1%

• West Texas Intermediate crude: +2%

• Brent crude: +1.8%

AJ Bell’s investment director, Russ Mould, underscored mounting anxiety about memory chips and other AI infrastructure in a morning note.

“With sentiment brittle, investors are becoming increasingly wary of valuations in the AI and technology sector — most notably in the memory chip space where share prices have surged to unprecedented levels this year,” he said.

Asia’s chip makers had been on a monster AI-fueled rally this year, but some of the region’s biggest winners are tumbling as investors question lofty valuations and South Korea moves to rein in speculative trading in one of this year’s hottest stock markets.

Nowhere is the reversal more striking than at Japan’s Kioxia.

The memory chipmaker was the second-best-performing non-US stock in the MSCI All Country World Investable Market Index in the first half of the year, soaring 631%. Last month, it became Japan’s most valuable listed company.

That momentum has unraveled quickly.

Kioxia shares plunged 16% on Friday following an overnight sell-off in US-listed memory stocks. The stock has halved since its June peak, wiping about 30 trillion yen, or roughly $185 billion, off its market value.

Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, fell over 5% despite reporting blockbuster second-quarter earnings on Thursday, with profits surging 77% from a year earlier.

Streeter attributed the adverse market reaction to investors growing “increasingly concerned about the sheer scale of spending by hyperscalers and the risks associated with deploying such vast sums into technology evolving at breakneck speed.”

South Korea’s market was closed on Friday, but Samsung Electronics and SK Hynix have already fallen roughly one-third from their peaks this year. SK Hynix’s Nasdaq-listed shares closed 14% lower on Thursday.

The weakness followed South Korea’s decision to tighten rules on single-stock leveraged exchange-traded funds after weeks of sharp market swings. Regulators said the measures were aimed at cooling excessive speculation.

South Korea had been one of the world’s hottest equity markets this year, with the rally fueled in part by heavy retail participation and leveraged bets concentrated in AI-related names.

Top economist and former PIMCO CEO Mohamed El-Erian said South Korean authorities face a delicate balancing act: tackling inflation while heading off excessive financial volatility that could trigger “disorderly deleveraging.”

“How this plays out over the coming weeks is worth watching: It’s not an easy mix to manage, and the latter, if mismanaged, could have some cross-border spillovers,” he wrote on X on Thursday.

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